Commodity Analysis

Gold set to retest life-time high

Akhil Nallamuthu | Updated on March 29, 2020 Published on March 29, 2020

Silver rose 14 per cent last week, outshining gold, breaks beyond ₹40,000

The iCOMDEX, the composite index of the Multi Commodity Exchange (MCX), gained marginally last week as gold prices rallied. But the price of the iCOMDEX’s largest component, crude oil, fell slightly.

Crude oil and gold are the two major components of the index, with 33 per cent and 17 per cent weight, respectively. In the upcoming week, the index might stay flat as the outlook for crude oil is bearish, whereas gold looks bullish.

MCX-Crude (₹1,699)

The April futures contract of crude oil in MCX was trading with a bearish bias last week as the contract declined gradually and breached the support at ₹1,740. The contract can be bearish until it remains below ₹2,000. Though the moving average convergence divergence (MACD) indicator in the daily chart is in the bear territory, the daily relative strength Index (RSI) is near the over-sold levels.

The overall direction of the price is downwards, and so one can take a bearish view. Traders can short the contract on rallies with a stop-loss at ₹2,050. The contract might drop to ₹1,500 in the coming days.

MCX-Gold (₹43,545)

The June futures contract of gold in MCX rallied strongly last week on the back of a support band between ₹39,000 and ₹40,000. The contract has rallied past the resistance at ₹43,000, opening the door for further strengthening.

The daily RSI indicator has moved above the mid-point level of 50 and the MACD indicator in the daily chart has entered the positive territory.

The contract can be bullish until the price is above 21- and 50-day moving averages (DMAs). Notably, ₹44,000 is a minor resistance. Hence, traders can buy the contract with a stop-loss at ₹43,000 if it moves above ₹44,000. On the upside, it can retest its previous high at ₹45,360. Above that level, it can rise to ₹46,000.

MCX-Silver (₹40,894)

Last week, the price of silver gained sharply, outperforming gold. The May futures contract of silver in MCX broke out of the resistance at ₹36,860 and rallied throughout the week. The contract stopped short of extending the rally beyond ₹42,000 as it is a considerable resistance.

The daily RSI indicator has come up, but remains below the mid-point level of 50. On the other hand, the MACD indicator in the daily chart has entered the positive territory.

Since ₹42,000 is a resistance, traders can buy the contract with a stop-loss at ₹40,000 if it breaks out of ₹42,000. The short-term target can be at ₹44,000 and ₹45,000.

MCX-Copper (₹375.2)

The April futures contract of copper in MCX was trading in a tight range last week. It was oscillating between ₹365 and ₹378. The contract price is below both 21- and 50-DMAs and the overall trend remains bearish. Substantiating this, the MACD indicator in the daily chart is in the negative region. Since ₹365 is a considerable support, traders can short the contract with a stop-loss at ₹378 if it breaches the support at ₹365. On the downside, the immediate support can be located at ₹355; below that level, the contract could drop to ₹338, its previous low.

NCDEX-Soybean (₹3,812)

The price of April futures contract of soyabean in the National Commodities and Derivatives Exchange (NCDEX) went up last week. The contract rose above the resistance at ₹3,625 and the 21-day moving average. It faces a resistance band between ₹3,836 and ₹3,890.

While one can buy the contract if it breaks above ₹3,890, traders with a high risk appetite can short the contract at current levels with tight a stop-loss as it is hovering near a strong resistance. On the downside, the support levels are at ₹3,625 and ₹3,600. The resistance level above ₹3,890 is ₹4,045.

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Published on March 29, 2020
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