Commodity strategies: Gold, silver, crude, base metals

Ravindra Rao

Gold futures continued to rally on Monday and hit the 61.8% Fibonacci retracement of the previous downtrend at Rs 48,200. Now the next key resistance exists around Rs 48,500, which is the previous top of the channel. Therefore, the price needs to hold above Rs 48,500 to resume its rally and move towards the next target resistance at Rs 49,000. Key support exists around Rs 47,700 (8-DEMA) followed by Rs 47,380 (200-DEMA). The bullish EMA crossover (8 and 20), along with the breaking of trend channels, fueled the metal’s bullish rally. In addition, the strength of the RSI, which hovers around 70, has preserved bullish hopes. All of the above technical factors support a higher price bias. So any dip towards support could attract buying and push the price towards Rs 48,500.

Trading strategy: Buy MCX Gold Dec at Rs 47,950. Target: Rs 48,500. Stop loss: Rs 47,700

MCX Silver recovered significantly over the week, after breaking through key resistance of Rs 65,800 on Friday. Now Rs 66,500 is the next resistance. If the bulls manage to close it above Rs 66,500 then it could move towards the 61.8% Fibonacci retracement of the previous downtrend at Rs 68,160. Meanwhile, key support is around of Rs 65,000 (200-DEMA), which could limit the decline. On the oscillator front, the Fast Stochastic is hovering in the overbought zone, which could lead to profit taking at higher levels. However, a strong RSI, which is at 77, supports the bull’s case. Based on the above analysis, we would expect the price to trade in the range of Rs 65,000 to Rs 67,000 with a sideways bias. A close below Rs 65,000 would cancel the bullish momentum and weaken the price towards Rs 63,800.

Trading range: Rs 65,000-Rs 67,000

(Ravindra Rao is CMT, EPAT, VP-Head Commodity Research, Kotak Securities Ltd. Opinions are her own)

Tapan Patel

Here is an overview of how different commodities behave in today’s market.

Outlook: ingots

Bullion prices traded weakly on Tuesday, as COMEX spot gold prices edged down to nearly $ 1,803 an ounce. COMEX spot silver prices fell 0.65% to near $ 24.40 an ounce in morning trading. Bullion prices traded under pressure on Tuesday as the dollar strengthened and US bond yields rose. The dollar index rose after China shifted its focus to growth as investors await the results of the Bank of Japan and ECB policy meetings. Bullion prices may trade sideways lower for the day.

Trading strategy: The MCX Gold resistance for December for the day is at Rs 48,500 per 10 grams with support at Rs 47,900 per 10 grams. The MCX Silver support for December is at Rs 63,800 per kg, resistance at Rs 67,800 per kg.

Outlook: crude oil

Crude oil prices traded firm Tuesday with benchmark NYMEX WTI crude oil prices near $ 83.81 per barrel in morning trading. Crude oil prices traded near a seven-year high due to supply tension and the outlook for higher demand. Crude oil prices have increased as natural gas prices rebound, leading to a switch from fuel to electricity. Rising demand before winter could push crude oil prices higher in the near term. We expect crude oil prices to trade sideways to rise for the day.

Trading strategy: The November support for MCX crude oil is at Rs 6,240 per barrel with resistance at Rs 6,380 per barrel.

Outlook: Base metals

Base metal prices traded mixed on Tuesday. Most metals maintained a stable trading range during the morning trade. Base metals peaked higher on a stronger dollar amid a shift in China’s policy. Base metals were boosted by higher gas and coal prices on Monday, while supply concerns from Peru bolstered trade firm copper prices. Aluminum prices fell to a three-week low, while nickel prices could remain firm on a higher demand outlook. The Chinese government has made sure to alleviate an electricity shortage in the coming months. Base metals may trade sideways to rise for the day.

Trading strategy: MCX Copper November support is at Rs 765 and resistance at Rs 778. MCX Zinc Novembre support is at Rs 280 and resistance at Rs 290. MCX Aluminum November support is at Rs 229 with resistance at Rs 235 .

(Tapan Patel is Senior Analyst, Commodities, HDFC Securities. His views are his own)

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