Gold futures in December rebounded well after testing Wednesday’s lows at Rs 45,700. Price broke through 8 and 20 day EMA resistance at Rs 46,180 and Rs 46,480, respectively , suggesting a phase of resumption of the trend. Meanwhile, the key resistance for the price exists around Rs 46,800. The price needs to break through the previous high to extend its rebound towards Rs 47,100. The general trend is down as the price is still hovering in the trend channel downhill. Medium-term momentum turned negative as the MACD index generated a crossover signal. However, a positive divergence in the RSI could limit the decline in gold prices. To conclude, the price should consolidate in the wide range of Rs 45,700 to Rs 46,800 with a lateral bias.
Trading range: Rs 45,700-46800
MCX silver futures followed the path of the yellow metal and saw a sharp rebound towards the 8 day EMA at Rs 60,100. Price hit the lower band of regression channel support at Rs 58 100 and increased, suggesting a phase of resumption of the trend. The rebound in the RSI from the oversold zone supported the recovery. The formation of a Bearish Pennant pattern is still in place which could restrict the recovery process. Now the price needs to break through the key resistance of Rs 61,670 to reverse silver’s downtrend. Until then, it could consolidate in a wide range of Rs 60,500 to 58,200 with a lower lateral bias. Therefore, any rise towards the resistance zone would attract selling.
Trading range: Rs 60,500-58,200
(Ravindra Rao is CMT, EPAT, VP-Head Commodity Research, Kotak Securities Ltd. Opinions are her own)
Here is an overview of how different commodities behave in today’s market.
Bullion prices traded flat on Friday with COMEX spot gold prices near $ 1,752 an ounce while COMEX silver spot prices fell by half a percent of $ 22.03 an ounce in the morning trade. Precious metals rebounded strongly on Thursday amid inflationary concerns despite the strength of US bond yields. Rising oil prices as well as power shortages can lead to higher input costs and hamper economic recovery. Bullion prices may trade sideways to rise for the day.
Trading strategy: December’s MCX Gold resistance for the day stands at Rs 46,700 per 10 grams with support at Rs 46,200 per 10 grams. MCX Silver support for December is at Rs 58,000 per kg and resistance at Rs 61,000 per kg.
Outlook: crude oil
Crude oil prices traded weakly on Friday with benchmark NYMEX WTI crude oil prices down 0.23% near $ 74.86 a barrel in morning trading. Crude oil prices have reduced some of the previous gains on expectations that the OPEC + supplier alliance could accelerate the expected increase in production to ease supply concerns. Rising prices for coal and natural gas due to lower supply have increased demand for crude oil. OPEC Plus countries are expected to meet on Monday where producers will discuss whether to go beyond their existing agreement to increase production by 400,000 barrels per day (bpd) in November and December. We expect crude oil prices to trade sideways to rise for the day.
Trading strategy: The October support for MCX crude oil is at Rs 5,480 per barrel with resistance at Rs 5,620 per barrel.
Outlook: Base metals
Base metal prices have traded lower with most metals falling as China braces for a national holiday week and weaker demand due to the electricity crisis. China faces a shortage of coal, the key supply to generate electricity, which has led to severe restrictions on manufacturers. Power outages in China have resulted in lower demand for industrial metals with limited operating activities. A stronger dollar could also cap the rise in base metals for the day. Base metals may trade lower for the day.
Trading strategy: MCX Copper October support is at Rs 687 and resistance at Rs 798. MCX Zinc October support is at Rs 247, resistance at Rs 254. MCX Aluminum September support is at Rs 224 with resistance at Rs 229 .
(Tapan Patel is Senior Analyst, Commodities, HDFC Securities. His views are his own)