We expect oil prices to trade sideways to positive in current range with support at $39 per barrel and resistance at $43 per barrel.
Commodity prices traded positive during the week passed by with most of the commodities in non-agri segment ending in the green. Crude oil futures were the highest gainers while Natural gas in the same pack lost more than 9 percent for the week. Base metals complex traded positive with steady gains except Nickel. Bullion prices witnessed rangebound trading during the week with gold and silver prices ending marginal up. Commodity prices gained on dollar index fluctuations which ended down by 0.44 percent for the week against the major currencies.
Bullion prices traded higher during the week with Gold and Silver prices fluctuating within a range with bullish bias. Spot gold prices at COMEX ended at $1,951 per ounce by Friday reporting gains over 0.50 percent for the week while COMEX Spot silver prices ended marginal up at $26.78 per ounce for the week. Bullion prices in India were capped on rupee appreciation as the spot rupee rose by around 8 paisa during the week against the dollar.
The Gold ETF holdings declined for the third week as holdings at SPDR Gold Shares fell to 1,246.98 tonnes on Friday. The CFTC data showed that money managers increased net long positions to six-week high by 10622 lots in last week while net long positions in silver were at eight week high by 3,545 lots.
Gold prices reported second weekly gain on dollar fluctuation and economic growth concerns amid rising virus cases across the globe. The dollar pared gains post US FOMC after FED signalled lower interest rates till 2023 sighting slower than expected economic growth. Global COVID-19 infections exceeded 30 million as per data from Johns Hopkins University with record cases in US, India and Brazil.
COMEX spot gold prices are trading within a triangular pattern awaiting breakout.
We expect bullion prices to trade in current range with bullish bias for short term with COMEX spot gold having strong support at $1,900 per ounce and resistance at $1,970/2,000 per ounce.
At MCX, Gold October prices have near term resistance at Rs 52,300 per 10 grams and support at Rs 50,700 per 10 gram. Silver prices are struggling to break above $29 with $30 as strong resistance to resume bullish trend while important support lies at $25. At MCX, December Silver prices have resistance at Rs 70,500/72,000 per KG, support lies at Rs 66,000 per KG.
Base metals prices witnessed buying during the week with Zinc, Copper and Lead gaining the most while Nickel prices traded lower remaining the exception. Base metals gained in two trading sessions of the week on US vaccine hopes and dollar decline while demand growth optimism from China capped downside.
Copper prices continued bullish stance with prices rose to the two years high on strong demand from China despite of rise in weekly inventories at SHFE and LME. However, Copper inventories at LME are still 70 percent down from the May 2020 peak levels. THE CFTC data showed that net long positions at COMEX Copper rose by 7,510 lots to 2-year high signalling high investment appetite. LME Copper prices have sustained above the key resistance above $6,750 per tonne. We expect Copper prices to continue bullish trend with resistance at $6,950/7,510 per tonne. At MCX, Copper September contract has important resistance at Rs 540/546 per kg and support at Rs 528 for the coming week.
Crude oil prices pared previous loses witnessing strong recovery as benchmark NYMEX WTI crude oil prices rallied by more than 10 percent to $41 per barrel for the week. Crude oil prices rebounded from the crucial support of $37 with the cues from super active Atlantic Hurricane Season, falling inventories and OPEC plus nations commitment for strong compliance.
The Saudi Arabia and Russia warned OPEC plus members to comply with output cut quotas in OPEC+ Joint Ministerial Monitoring Committee meeting. The periodical output shut at Gulf of Mexico dues to Hurricane threat has led to higher inventory withdrawal. The CFTC data showed that the money managers have increased their net long positions by 25,900 lots in last week.
Crude oil prices have retained its previous trading range of $37-$43 per barrel, with near term support at $37 per barrel. The concerns over US economic growth and lower demand may cap upside limited in oil prices. The recent development from Libya to lift oil blockade may also add to supply pressure in oil prices.
We expect prices to trade sideways to positive in current range with support at $39 per barrel and resistance at $43 per barrel. At MCX, Crude oil October contract has important support at Rs 2,810 per barrel and resistance at Rs 3,190.
(The author is Senior Analyst - Commodities at HDFC Securities.)Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.