Commodity strategies: Gold, silver, crude, base metals


Tapan Patel


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

Outlook: ingots
Bullion prices traded flat Thursday with COMEX spot gold prices near $ 1,812 an ounce. Silver spot prices on COMEX were also trading near $ 24.11 an ounce during the morning trade. Precious metals have hovered in the upper trading range on mixed global indices. Gold prices eased from previous highs pending the U.S. labor market report on Friday, while silver prices rallied in the previous session on good deals despite the weak base metals. The dollar index traded slightly higher, limiting the gains in bullion prices. We expect bullion prices to trade sideways to rise for the day.

Trading strategy:

October gold resistance for the day stands at Rs 47,400 per 10 grams with support at Rs 46,800 per 10 grams. The MCX Silver support for December is at Rs 62,500 per kg, resistance at Rs 65,000 per kg.

Outlook: crude oil
Crude oil prices traded lower on Thursday with benchmark NYMEX WTI 0.38% down nearly $ 68.33 a barrel in morning trading. Crude oil prices saw a sell off after OPEC and countries stuck to their strategy of gradually increasing supply despite growing concerns about Covid. OPEC plus agreed on Wednesday to continue its policy of phasing out record production cuts by adding 400,000 bpd each month to the market. The EIA report showed that crude oil inventories fell 7.2 mb last week. We expect crude oil prices to trade sideways to rise for the day.

Trading strategy: The September support for MCX crude oil is at Rs 4,940 per barrel with resistance at Rs 5,080 per barrel.

Outlook: Base metals
Base metals traded firm with a positive open in most metals. Aluminum prices traded with a gain of around 1% due to declining supply issues amid China’s crackdown on polluting smelters. Base metals were supported by a weaker dollar hovering near one-month lows. Strong stock indexes could boost some base metal purchases with signs of improving industrial demand. Base metals may trade sideways to increase for the day.

Trading strategy: September support on MCX copper is at Rs 705 and resistance at Rs 715. September support on MCX zinc is at Rs 242, resistance at Rs 248. September support on MCX aluminum is on stands at 211 Rs with resistance at 216 Rs.

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


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