Copper prices extended rally last week on fears of supply disruption from top producing nations Peru and Chile.
Commodity prices traded strong last week, with base metals leading the gains while crude oil was under pressure in a choppy range. Bullion traded positive, with silver prices outperforming gold on strong base metals. Commodity prices also got boost with decline in the dollar index, which shed nearly half a percent during the week.
Gold prices rallied to the highest levels since 2011, gaining for the fifth week on the trot. Comex spot gold ended at $1,798 per ounce, hitting high at $1,818 per ounce during the week.
Gold prices rallied on safe-haven buying on fear of second wave of virus infections in the US and worries over return of lockdown measures.
The gold ETF holdings continued to hit highs as holdings at SPDR gold shares rose to 1,200.46 tonnes on Friday. Comex spot silver prices outperformed gold, gaining more than 3 percent with strong buying in base metals.
We expect gold to trade higher with near-term resistance at $1,830 per ounce and support at $1,790/1,780. On MCX, August gold prices have the near-term resistance at Rs 49,500 per 10 grams and support at Rs 48,600.
Crude oil ended flat with benchmark NYMEX WTI prices trading in the narrow range above $40 per barrel through the last week. Crude is struggling to sustain above $40 as growing virus cases fan concerns about demand recovery with the fear of another lockdown.
Crude prices traded under pressure on larger than expected weekly inventory build-up and uncertainty over OPEC's decision to extend the output cut. The total crude oil rigs continued to decline, with active oil rigs falling by four to 181, as per data published by Baker Hughes.
We expect oil to continue trading in the $37-43 range for the current week on speculation over OPEC plus nations' decision on output cut extension.
MCX crude futures for July have important resistance at Rs 3,160 per barrel and support at Rs 2,870 for the current week.
Base metals complex witnessed sharp buying in the previous week, with zinc and copper prices rallying the most, buoyed by an improved demand outlook and a fear of supply disruption.
Zinc prices traded higher by nearly 8 percent with continuous drawdown in inventories on higher demand outlook.
Copper extended rally on the fear of supply disruption from top producing nations Peru and Chile. The Chilean copper workers at an Antofagasta Plc copper mine rejected a final wage offer that added to supply concerns.
Most of the base metals witnessed buying as the resumption of economic activities lifted demand for industrial metals. Copper prices traded above $6,000 per tonne at LME on supportive economic data from top consumers. Copper inventories at SHFE rose by 14,347 tonnes for the week. We expect copper prices to continue upside, with LME copper prices having an important resistance at $6,430 per tonne with support at $6,040.
MCX July copper futures’ near-term resistance is at Rs 510 per kg with support at Rs 480 per kg for the short term.
(The author is Senior Analyst - Commodities at HDFC Securities.)Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.