​Commodity strategies: Gold, silver, crude, base metals

HDFC Securities
Tapan Patel

Supported by a weaker dollar, commodity prices traded steady on Wednesday. Bullion and base metals traded mixed, keeping a range bound trading while crude oil continued upside on the weekly inventory draw. The dollar index ended down by 0.25 per cent for the day, ahead of the Thanksgiving holiday. Here is a look at how different commodities are behaving in today’s market.

Outlook: Bullion
Bullion prices traded firm on Thursday. Spot gold prices at COMEX were trading marginal up near $1,810 per ounce, while spot silver was up near $23.42 per ounce in morning trade. Bullion prices witnessed some short recovery on holiday-shortened week as the US markets is closed today for Thanksgiving. Bullion investors have turned cautious over vaccine progress and stimulus hopes. Gold holdings at SPDR gold ETFs declined to 1,194.78 tonne from 1,200 tonne a day before. Bullion prices are expected to trade sideways, keeping a narrow trading range.

Trading Strategy: MCX Gold December resistance for the day lies at Rs 48,900 per 10 gram, with support at Rs 48,400 per 10 gram. MCX Silver December support lies at Rs 59,000 per kg, while resistance stood at Rs 61,500 per kg.

Outlook: Crude Oil
Crude oil prices traded higher on Thursday as benchmark NYMEX WTI crude oil was trading near $45.93 per barrel. Crude extended gains on a surprise weekly inventory draw as EIA data showed that crude oil stockpile fell by 0.75 million barrels (MB) against a forecast of an increase of 0.61 mb. Crude oil maintained a bullish stance on vaccine progress and on speculation over meeting of OPEC plus nations. Crude oil prices are expected to trade sideways to up for the day on strong global cues.

Trading Strategy: MCX Crude Oil December support lies at Rs 3,340 per barrel, with resistance at Rs 3,450 per barrel.

Outlook: Base Metals
Base metals traded higher on Thursday with most of the metals resuming the uptrend on strong demand prospects from China. Copper prices witnessed strong buying with a plunge in inventories which are now at the lowest levels since 2014. Zinc prices are expected to trade higher on lower supply concerns with a rise in industrial demand. Base metals are expected to trade in a positive trend on stimulus hopes from US while the risk-on sentiment on vaccine hopes will support base metals to trade higher with strong equity indices.

Trading Strategy: MCX Copper December support lies at Rs 561 and resistance at Rs 570. MCX Zinc November support lies at Rs 215 and resistance at Rs 221.


Kotak Securities
Ravindra Rao

MCX Gold
MCX Gold prices witnessed an inverted hammer bullish candlestick pattern, indicating that the downward move has stalled. The pattern will get confirmed only above Rs 48,885, while the lower support of Rs 48,390 will be crucial for the bulls to hold. Bollinger bands expansion suggests a volatility in price. Relative strength index is near oversold zone at 34, indicating a likely pullback. A close above Rs 48,885 will be the first sign of pullback in gold prices. However, if it sustains below Rs 48,390 then it might test Rs 47,900 (200-day EMA).

Trading Strategy: Buy MCX Gold Dec only above Rs 48,895. Target price: Rs 49,600-49,900. Stop loss: Rs 48,390.

MCX Silver
Following the trend in gold, MCX Silver prices made a positive closing near the lower trend line, suggesting a likely pullback. A sustenance below Rs 58,800 level might drag it further below towards Rs 58,300. The immediate resistance is at Rs 60,500. Stochastic value is at 9, indicating an oversold zone and validating a strong pullback. A closing above Rs 60,500 will change the trend sideways to neutral from a downward trend.

Trading Strategy: Buy MCX Silver Dec at Rs 59,400. Target price: Rs 60,500. Stop loss: Rs 58,800.