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    Commodity strategies: Gold, silver, crude, base metals

    Synopsis

    The dollar index traded firm and US bond yields rose, underpinning the demand for commodities.

    Commodity Outlook ShutterShutterstock.com
    Here is a look at how different commodities are behaving in today’s market.

    Commodity Summary

    MCX
    By Tapan Patel

    Commodites traded on a weak note with most non-agro ones witnessing declines except crude oil. Bullion prices traded lower on stronger US economic recovery while base metals traded under pressure on weak Chinese data. The dollar index traded firm and US bond yields rose, underpinning the demand for commodities. Here is a look at how different commodities are behaving in today’s market:

    Outlook: Bullion
    Bullion prices traded lower with spot gold prices at COMEX near $1,767 per ounce and spot silver at COMEX half a per cent down, below the $26 per ounce mark, in morning deals. Bullion prices pared early gains on US economic recovery with better-than-expected GDP numbers in the US. The rise in US bond yields also pressured bullion prices to trade weak. The positive economic data from the US and easing of lockdown measures in Europe capped the upside in precious metals. We expect bullion prices to trade sideways to down for the day.

    Trading Strategy
    Resistance for MCX gold June lies at Rs. 47,100 per 10 grams for the day and support at Rs. 46,400 per 10 grams. For MCX silver May, support lies at Rs 67,200 per kilogram and resistance at Rs 69,500 per kilogram.

    Outlook: Crude Oil
    Crude oil prices traded weak with benchmark NYMEX WTI crude oil prices over half a per cent down at $64.60 per barrel in morning trade. Crude oil prices pared the previous day's gains over data showing slower-than-expected China factory activity. The oil demand largely relies on growth in China and the US. The disappointing data may keep oil prices under pressure for the day despite better US economic data. We expect crude oil prices to trade sideways to down for the day.

    Trading Strategy
    Support for MCX crude oil May lies at Rs. 4,730 per barrel with resistance at Rs. 4,850 per barrel.

    Outlook: Base Metals
    Base metals prices traded on a mixed note with most of them lower in the morning deals. Base metals prices declined on weaker China PMI and factory activities data. Copper prices are nearing $10,000 per tone levels at LME for the first time since 2011 on lower supply concerns and higher demand prospects. The rising stockpiles in China may limit the upside in Copper prices. Nickel prices declined on resumption of supplies from Indonesia. Base metals are expected to trade sideways to down for the day.

    Trading Strategy
    Support for MCX copper May lies at Rs 751 and resistance at Rs 760. Support lies at Rs 227 for MCX zinc May and resistance at Rs 234. For MCX nickel May, support lies at Rs. 1,260 with resistance at Rs. 1,320.

    (Tapan Patel is Senior Analyst (Commodities) at HDFC Securities)

    By Ravindra Rao

    The formation of a morning star candlestick on the intraday chart didn’t confirm as the bulls failed to make MCX gold close above Rs 47,300 on the four-hour chart. As a result, the bears got an edge as the double bottom support near Rs 46,800 was penetrated and the price went on to make a low near Rs 46,460.The next support is pegged near Rs 46,300 and immediate resistance for the day would be near Rs 47,000. Momentum indicator RSI is exactly near 50 on the daily chart, indicating a sideways move. The eight-day moving average is still above the 20-day moving average, indicating bull strength. For the day, we expect the price to trade in the range of Rs 46,400-47,000. A break on either side might give direction.

    Strategy
    Buy MCX gold June at Rs 46,550 for a target of Rs 47,000 with a stop loss at Rs 46,350

    MCX silver also failed in confirming the bullish engulfing pattern and the bears got an edge. The price is currently between the eight- and 20-day moving averages of Rs 70,000 and Rs 68,400, respectively. RSI has slipped slightly below 50, indicating a sideways move. Support for the day is pegged near Rs 68,000 followed by Rs 67,500. Resistance is at Rs 69,050, and then Rs 69,500.A negative divergence between price and momentum oscillators might give a slight edge to the bulls today. We expect it to trade in a broad range Rs 69,050-68,000 for the day. A break above Rs 69,050 would take it past Rs 69,500.

    Strategy: Buy MCX Silver Jul Buy 68000 Target 69050 Stop loss 67500

    (Ravindra Rao, CMT , EPAT, is VP-Head Commodity Research at Kotak Securities)




    (Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
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    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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