Commodity strategies: Gold, silver, crude, base metals
29 Jul 2021
Commodity prices traded firm on Wednesday with most of the commodities in non-agro segment trading higher, except base metals. Bullion prices rallied on weaker dollar, while crude oil prices gained on bullish weekly inventory data. Base metals traded under pressure on profit booking and weak equity indices. Here is a look at how different commodities are behaving in today’s market:
Bullion prices traded higher on Thursday with spot gold prices at COMEX trading near $1,815 per ounce, while spot silver prices at COMEX were trading more than 1% up at $25.20 per ounce in morning trade. The precious metals recovered post FOMC meeting on a dovish Fed stance. The dollar index fell to a two-week-low after Fed chairman said rate hike is far away. Jerome Powell warned that the US job market still had “some ground to cover” before Fed begins to taper its assets, although he did not give a specific timeline. We expect bullion prices to trade sideways to up for the day.
Gold Aug resistance for the day lies at Rs 48,200 per 10 gram with support at Rs 47,500 per 10 gram. MCX Silver September support lies at Rs 66,500 per kg, resistance at Rs 68,500 per kg.
Outlook: Crude Oil
Crude oil prices traded firm on Thursday with benchmark NYMEX WTI crude oil prices trading 0.47% up near $72.73 per barrel in morning trade. Crude oil prices traded higher on bullish weekly inventory data. The EIA report showed a draw of 4.089 million barrels in the week to July 23 to their lowest level since January 2020. Crude oil prices got support from peak summer season which has resulted in weekly inventory drawdown. We expect crude oil prices to trade sideways to up for the day.
Trading Strategy: MCX Crude Oil August support lies at Rs 5,350 per barrel with resistance at Rs 5,480 per barrel.
Outlook: Base Metals
Base metals prices traded higher on Thursday morning as most of the metals recovered on weaker dollar and lower supply. Copper prices traded higher on fear of labour strike which may lead to supply disruption from world’s top copper mine in Chile. Union leaders at Escondida are calling on workers to reject owner BHP Group’s final wage offer, raising the possibility of a strike at the mine. Nickel prices traded firm near 7-year highs on strong demand outlook and fall in inventories. Aluminium prices may see a gradual upside as global glut is set to reduce with China crackdown on smelters. Base metals may trade sideways to up for the day.
Trading Strategy: MCX Copper August support lies at Rs 750 and resistance at Rs 760. MCX Zinc August support lies at Rs 242, resistance at Rs 248. MCX Nickel August support lies at Rs 1,460 with resistance at Rs 1,510.
(Tapan Patel is Senior Analyst – Commodities, HDFC Securities. Views are his own)