crude oil price: Commodity strategies: Gold, silver, crude, base metals


By Tapan Patel

Commodity prices traded lower in the second day of the week with most of the commodities in non-agro segment ended in red for the day. Commodity prices traded under pressure on stronger dollar over delay in US stimulus and new strain of virus concerns. The dollar index rose by 0.68 per cent to 90.65 for the day. Here is a look at how different commodities are behaving in today’s market.

Outlook: Bullion

Bullion prices traded marginally up on Wednesday with spot gold prices at COMEX was trading near $1,867 per ounce while spot silver prices at COMEX was trading nearly 1 per cent up to $25.39 per ounce in the morning trade. Bullion prices pared some previous loses on pandemic concerns over new strain of coronavirus and increase lockdowns in other parts of the world. We expect bullion prices to trade sideways to up for the day.

Trading Strategy:

MCX Gold February resistance for the day lies at Rs. 50,400 per 10 grams with support at Rs. 49,800 per 10 grams.

MCX Silver March support lies at Rs. 65,000 per KG, resistance at Rs. 68,500 per KG.

Outlook: Crude Oil

Crude oil prices traded lower for the third day on the trot with benchmark NYMEX WTI crude oil prices were trading 1.40 per cent down to $46.34 per barrel on Wednesday. Crude oil prices extended decline on weekly inventory build and worries over new B.1.1.7 strain of corona virus spreading. The increased travel restrictions and lockdowns in more parts of the world has raised concerns over fuel demand recovery. Crude oil prices are expected to trade sideways to down for the day awaiting official inventory data from EIA in evening session.

Trading Strategy:

MCX Crude Oil January support lies at Rs. 3,370 per barrel with resistance at Rs. 3,480 per barrel.

Outlook: Base Metals

Base metals prices continued downside move on Wednesday with Copper and Zinc prices fell the most, followed by Nickel and Aluminium. Base metals traded lower on demand growth worries over delay in US stimulus and increased lockdown and travel restriction due to new strain of corona virus spreading. More countries are imposing restrictions to control the virus spreading which may hinder demand growth of base metals. Base metals are expected to trade sideways to down for the day on weak global cues.

Trading Strategy:

MCX Copper December support lies at Rs. 587 and resistance at Rs. 596.

MCX Zinc December support lies at Rs. 213, resistance at Rs. 219.

MCX Nickel December support lies at Rs. 1,230 with resistance at Rs. 1,270.

(Tapan Patel is a Senior Analyst (Commodities) at HDFC securities)


By Ravindra Rao


MCX Gold February witnessed decline towards the 5 day EMA support at 50,080 as it failed to move beyond 50,680. Meanwhile price is trading above 21 day EMA at 49,710 and trend line support near 49,600, which could provide immediate support. Also the bull case is supported by the positive crossover of EMA’s 5 (50,080) and 21 (49,710) and RSI at 56. Key resistance for the Feb future is around 50,680, which the bulls could try to target. Likewise on the downside, failure to hold above 49,450 would halt the bullish momentum in gold futures.

Strategy:

Buy MCX Gold Feb at Rs 49,750 with a target of Rs 50,450 and a stop loss at Rs 49,450.

MCX Silver March future in a volatile session witnessed decline towards the breakout support near 66,400. The next support for Silver holds around 65,700, which is the key for near term. Failure to hold the support would weaken the price towards 64,800 (21 Day EMA). On the contrary if the support is held, then a rebound towards 68,500 is possible which might be followed by 69,700. The price is still moving inside the rising channel with bullish crossover of 5 and 21 day EMA along with firm RSI (59) giving a slight edge to the bulls.

Strategy:

Buy MCX Silver Mar at Rs 65,800 with a target of Rs 68,500 and a stop loss at Rs 64,400.

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





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