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Commodities strategy for this week by CapitalVia Global Research

Purohit recommends a sell-on-rise in Gold and Zinc, while a buy-on-dips strategy can be deployed in MCX Silver, Crude Oil and Nickel.

February 08, 2021 / 03:12 PM IST
Budget announcement of lower custom duty in gold and silver was the main reason for correction in gold and silver, however weakness in dollar supported the bullion prices. Here are the strategies for the commodities by Kshitij Purohit, Product Manager Currency & Commodity, CapitalVia Global Research for this week.
Budget announcement of lower custom duty in gold and silver was the main reason for correction in precious metal prices, however, weakness in dollar supported the bullion prices. Here are the strategies for the commodities by Kshitij Purohit, Product Manager Currency & Commodity, CapitalVia Global Research for this week.
Gold COMEX | We guess we ought to pay heed to the US dollar and the interest rates coming out of the United States, of course. If interest rates in the United States continue to climb, that will be very bad for gold, as it tends to move in the opposite direction. For the next week, traders should go for any sell-on-rise opportunity from the trend line resistance of USD 1840. Keep the stop loss above at USD 1885 and keep the target around lower support of USD 1760-1750.
Gold COMEX | We guess we ought to pay heed to the US dollar and the interest rates coming out of the US. If interest rates in the US continue to climb, it will be very bad for gold as it tends to move in the opposite direction. For the next week, traders should go for any sell-on-rise opportunity from the trend line resistance of USD 1,840. Keep the stop loss above at USD 1,885 and keep the target around lower support of USD 1,760-1,750.
3. Full set of 18K gold teeth |
Gold MCX | After a cut in import duty in domestic market gold came down after the Union Budget. International gold also came down due to a rise in the dollar index and higher US yield. Current 14 days RSI is at 30, so any retracement to oversold zones around Rs 47,700-48,000 will be a shorting opportunity for coming week. For the upcoming week, traders should look forward to a sell-on-rise opportunity from Rs 47,700 - 47,750, keeping stop loss of around previous resistance level of Rs 48,300, for aiming target below Rs 46,200.
Source: Reuters
Silver MCX | MCX Silver traded very volatile last week after the supply came to the physical market, however, silver is trading above the 50 days SMA placed at Rs 66270 and RSI is also supportive for the price. For the upcoming week, traders should go for buy-on-dips strategy in MCX Silver around the level of Rs 66,700 with keeping stop loss around Rs 66,000 and target of Rs 69,000.
Crude Oil | The Crude Oil price surged during the Friday trading session but gave back some of the profits later in the day. This is focused on stimulus and, of course, on the assumption that we will continue to see stimulus flowing out of the US and forcing the market higher. Traders should wait for buy-on-dips opportunity from 4,020-4,030 in MCX Crude oil where one should keep stop loss below 3,920, with an aim of target beyond psychological level of 4,300.
Crude Oil | The Crude Oil price surged during the Friday trading session but gave back some of the profits later in the day. This is focused on stimulus and, of course, on the assumption that we will continue to see stimulus flowing out of the US and forcing the market higher. Traders should wait for a buy-on-dips opportunity from R s4,020-4,030 in MCX Crude oil where one should keep stop loss below Rs 3,920 for a target beyond the psychological level of Rs 4,300.
Natural Gas MCX | The weather is expected to be much cold in western portion of the United States the next two weeks. This should increase heating demand in the west and generate a divergence in natural gas prices, however price has not sustain above 220 levels. Investor looks shorting opportunity with the small amount of stop loss as this could be last cold wave in the US and then price will start normal to hotter. For the next week, traders should keep an eye around the resistance level around 227-227.50 for any selling opportunity. The stop loss for sell position should be around 232 – previous season resistance with maintaining target around 214-210.
Natural Gas MCX | The weather is expected to be much cold in western portion of the United States the next two weeks. This should increase heating demand in the west and generate a divergence in natural gas prices, however price has not sustain above 220 levels. Investor looks shorting opportunity with the small amount of stop loss as this could be last cold wave in the US and then price will start normal to hotter. For the next week, traders should keep an eye around the resistance level around 227-227.50 for any selling opportunity. The stop loss for sell position should be around 232 – previous season resistance with maintaining target around 214-210.
Copper
Copper MCX | Copper prices were trading near 21 days average and in next week there is a long holiday in China. It is expected to trade volatile before the long holiday. For the upcoming week, traders should look for sell opportunity in Copper where one should enter around Rs 612. The ideal range of the target is around Rs 592-590. Maintain a stop loss around Rs 618.
Zinc MCX | The Zinc future is still for the most part in sideways-to-lower consolidation trading ranges, but what weakness has been seen in recent weeks has not picked up downward momentum, suggesting there is little appetite to reduce exposure on a large scale. Traders should look forward for sell-on-rise opportunity in MCX Copper for the upcoming week. The optimal range to sell around 215.50-215 and it will be advised for that role to hold stop loss around 219.50 and target the next target above 202-200.50.
Zinc MCX | The Zinc future is still for the most part in sideways-to-lower consolidation trading ranges, but what weakness has been seen in recent weeks has not picked up downward momentum, suggesting there is little appetite to reduce exposure on a large scale. Traders should look forward for a sell-on-rise opportunity in MCX Zinc for the upcoming week. The optimal range to sell is around Rs 215.50-215. Keep stop loss around Rs 219.50 for a target above Rs 202-200.50.
Lead MCX | For now it looks like the underlying uptrend is paused, with the market expecting better demand to come through while physical demand recovers as the year progresses. Needless to say, holding up in high ground comes with its dangers. For the upcoming week, traders should go for buying opportunity in Lead future. The ideal buying position should be around support of 162-162.25 and may aim for the targets above 167.50 with keeping stop loss around 159.20.
Lead MCX | For now, it looks like the underlying uptrend is paused with the market expecting better demand to come while physical demand recovers as the year progresses. Needless to say, holding up in high ground comes with its dangers. For the upcoming week, traders should go for buying opportunity in Lead future. The ideal buying position should be around the support of Rs 162-162.25 for a target above Rs 167.50, keeping stop loss around Rs 159.20.
Nickel
Nickel MCX | Nickel had a deep sharp fall but recovered from the strong support of Rs 1,272 in the start of the previous week. We have seen further bullishness in price once it started to trade below the 21-SMA of daily chart placed at Rs 1,303. Technically, Traders should go for a buy-on-dips strategy for MCX Nickel future where we may find some buying opportunity around the psychological level of Rs 1,300-1305. Maintain stop loss around Rs 1,285 for a target of Rs 1,335.
Rakesh Patil
first published: Feb 8, 2021 01:42 pm

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