Commodity Analysis

Gold retains the glitter

Akhil Nallamuthu | Updated on June 28, 2020 Published on June 28, 2020

August futures of the metal will remain bullish as long as it stays above ₹47,650

The iCOMDEX, the composite index of the Multi Commodity Exchange (MCX), ended flat last week as two of its largest components, crude oil and gold, were directionless.

Unless both the commodities establish a trend, the index might continue to move sideways.

MCX-Crude (₹2,906)

The July futures contract of crude oil in MCX declined marginally last week after failing to break out of the resistance at ₹3,100. Currently hovering around the 21-day moving average (DMA), the price might get into a sideways trend between ₹2,700 and ₹3,100 in the coming week.

While the daily relative strength index (RSI) indicates a lack of trend, the moving average convergence divergence (MACD) indicator in the daily chart is displaying a bearish bias as the trajectory is turning downwards. A bearish trend-reversal can be confirmed only if the price slips below ₹2,700; until then the contract can be inclined to uptrend.

So, traders can either go long with a stop-loss at ₹2,500 if the contract moderates to ₹2,700 or go long with a stop-loss at ₹3,000 if the contract breaks out of ₹3,100.

The resistances above ₹3,100 are at ₹3,250 and ₹3,340.

MCX-Gold (₹48,305)

Though the August futures contract of gold in MCX ended the week marginally higher, it was largely consolidating between ₹47,650 and ₹48,500.

Notably, it registered a fresh high of ₹48,589 mid-week and has been forming higher lows since the beginning of May — a bullish indication.

Supporting the positive bias, the daily RSI has been moving up in tandem with the price and the MACD indicator in the daily chart is pointing upward and stays in the positive territory. Also, the price remains well above 21-DMA.

Though there are bullish indications, the contract is now moving in a sideways trend.

Hence, traders can buy the contract with a stop-loss at ₹47,500 if it breaks out of ₹48,600.

On the upside, the contract might rally to ₹50,000.

MCX-Silver (₹48,365)

The July futures contract of silver in MCX has been on a sideways trend for the past one month. It has been oscillating between ₹47,000 and ₹50,000; unless the price breaches either of these levels, the next leg of trend will remain uncertain.

Since the beginning of the consolidation phase, the daily RSI has been flat whereas the MACD indicator in the daily chart has been on a decline. But both the indicators remain in their respective bullish territory.

Considering these factors, traders can hold back fresh positions until either of ₹47,000 or ₹50,000 is breached.

Above ₹50,000, the contract might retest its prior high of ₹51,235; a break below ₹47,000 could drag the price to ₹45,000.

MCX-Copper (₹457.6)

The July futures contract of copper in MCX, which was fluctuating in a tight range between ₹450 and ₹456 for most part of last week, broke out of it on Friday.

Though it broke out, a close at ₹457.6 does not appear to be decisive. But the contract is on a good uptrend as it has been forming higher highs since April, indicating a considerable positive momentum.

Even as the price action is hinting at a formidable bull trend, there are signs of weakness, indicated by the RSI and the MACD indicators in the daily chart.

While the RSI hints at a potential bearish divergence, the MACD, which has been rising for the past one month, has flattened.

Though the trend is bullish, the uptrend seems to be losing steam. So, traders can initiate fresh long positions with a stop-loss at ₹445 if the contract rallies past ₹460. Above ₹460, it might rally to ₹470 and ₹475.

NCDEX-Soybean (₹3,746)

The July futures contract of soyabean in the National Commodities and Derivatives Exchange (NCDEX) went up during the first half of the week, but it started to decline after facing a hindrance at ₹3,850. The contract appears to be in a sideways trend between ₹3,700 and ₹3,850.

The RSI and the MACD indicator in the daily chart are exhibiting bearish bias.

The RSI is showing a fresh downtick and as a result it has slipped below the midpoint level of 50, whereas the MACD hints are bears gaining momentum.

Considering the aforementioned factors, traders can sell the contract if it breaks below the support of ₹3,700.

The stop-loss can be at ₹3,800. On the downside, ₹3,600 and ₹3,550 are the potential support levels.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on June 28, 2020
This article is closed for comments.
Please Email the Editor