Commodity strategies: Gold, silver, crude, base metals

Outlook: Bullion
Bullion prices traded firm with spot gold prices at COMEX trading near $1,785 per ounce, while spot silver prices were trading over half a percent up near $26.34 per ounce in the morning trade. Bullion prices gained on dovish Fed outlook with no hurry in curbing emergency support. Gold prices recovered on dollar decline followed by another stimulus from the Biden administration. US President Joe Biden unveiled a new $1.8 trillion stimulus which boosted buying in gold on expanding the Fed balance sheet. We expect bullion prices to trade sideways to up for the day.

Trading Strategy:
MCX Gold June resistance for the day lies at Rs. 47600 per 10 grams with support at Rs. 46800 per 10 grams.

Silver May support lies at Rs. 68500 per KG, resistance at Rs. 71500 per KG.

Outlook: Crude Oil
Crude oil prices traded firm with benchmark NYMEX WTI crude oil price trading 0.27% up at $64.03 per barrel in the morning trade. Crude oil prices traded up on expectation of higher demand which offset Covid worries and hike in supply. The higher demand from the US and China will absorb supply hikes in coming months. The OPEC plus forecasted a demand growth to 6 million barrels per day for 2021. We expect crude oil prices to trade sideways to down for the day.

Trading Strategy:
MCX Crude Oil May support lies at Rs. 4710 per barrel with a resistance at Rs. 4820 per barrel.

Outlook: Base Metals
Base metals prices traded mixed as most of the metals kept to firm trading range over dollar decline post US FOMC. Copper prices extended gains at LME with green spending over US infrastructure boost. Base metals also gained after the US President unveiled a new stimulus package of $1.8 trillion on Wednesday. Nickel prices were up on supply squeeze from China. Base metals are expected to trade sideways to up for the day.

Trading Strategy:
MCX Copper May support lies at Rs. 762 and resistance at Rs. 770.

MCX Zinc May support lies at Rs. 232, resistance at Rs. 237.

MCX Nickel May support lies at Rs. 1280 with resistance at Rs. 1340.

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


By Ravindra Rao


MCX Gold tested the low at Rs 47800 and witnessed a bounce back. A ‘Morning Star’ bullish candlestick formation at the lower end might give bulls the edge in today’s session. However, the star formation will be confirmed only if the price closes above Rs 47300 on a 4 hour closing. A double bottom near Rs 46800 would act as a strong support for the day. Resistances for day would be at Rs 47300 followed by Rs 47600. RSI has rebounded from 35 to 43. However, it needs to move above 50 for a bullish confirmation. Going by the above evidence, we expect the ‘Morning Star’ pattern might get confirmed today and the price might reach Rs 47600. Bullish momentum might fade below Rs 46800.

Strategy:
Buy MCX Gold June at Rs 47100 with a target of Rs 47600 and a stop loss at Rs 46800.

MCX Silver also fell yesterday but rebounded following a reversal in gold and industrial metals. A ‘Bullish Engulfing’ candlestick pattern at the lower end might give bulls the edge today. However the pattern might get confirmed only on a break and close above Rs 68100, the pattern high. On the flipside, the pattern low near Rs 67500 might act as a good support. Although the momentum oscillator RSI has rebounded from lower levels, it needs to sustain above 50 for the bulls to get an edge. We expect silver to trade higher for the day and might test the resistance near Rs 69500.

Strategy:
Buy MCX Silver May at Rs 68200 with a target of Rs 69500 and a stop loss at Rs 67500.

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