Commodity Analysis

Gold to notch up further gains

Akhil Nallamuthu | Updated on February 16, 2020 Published on February 16, 2020

Outlook for silver uncertain as it continues to consolidate

MCX iCOMDEX composite index, the benchmark of the Multi Commodity Exchange (MCX), went up marginally last week.

The upmove was led by a rally in the price of gold whose weight in the index is nearly 23 per cent.

It closed at 10,043 compared with the previous week’s close of 9,977. Crude oil, which has the highest weight (30 per cent), also contributed as it gained marginally. In the upcoming week, the index might continue to gain, backed by a potential uptick in gold price.

Also, a possible recovery in crude price can push the index upward.

MCX-Crude (₹3,737)

Crude oil price went up marginally and the March futures contract at the MCX registered a positive weekly close, after posting loss in the preceding few weeks.

There are indications of a recovery as the daily relative strength index (RSI) and the moving average convergence divergence (MACD) indicator are showing an uptick. However, the contract faces a hurdle at ₹3,785.

Traders can buy the contract with a stop-loss at ₹3,600 if it moves above ₹3,785. The nearest resistance can be spotted at ₹4,000 which can be the near-term target. Above that level, ₹4,075 can act as a resistance.

MCX-Gold (₹40,979)

After consolidating for most part of the week, gold price rallied last Friday. The April futures contract bounced from the 21-day moving average support at ₹40,525. The price action in the daily chart hints at a further rally, which is corroborated by the RSI, which also indicates bulls gaining strength. The RSI remains above the mid-point level of 50. Hence, traders can initiate fresh long positions on declines. The stop-loss can be at ₹39,900. The immediate resistance is at ₹41,300.

Above that level, the contract can rally to ₹42,000.

MCX-Silver (₹46,227)

Silver continued to consolidate, and as a result, the March futures contract of the metal has been moving in a sideways trend between two key levels at ₹45,400 and ₹47,250. Until either of these levels are breached, the next leg of the trend cannot be confirmed.

Traders can execute a range trading strategy until the contract moves out of the above-mentioned price band. The resistance above ₹47,250 is at ₹48,100, whereas the support below ₹45,400 is at ₹44,615.

MCX-Copper (₹433.9)

The recovery in copper was capped by a a resistance at ₹436. During the past week, the February futures contract was sluggish. The 21-day moving average lies at ₹436, making it a substantial resistance; unless the contract breaks out of that level, the bearish trend will remain intact.

Since the major trend is bearish and the contract is trading near a resistance, traders can initiate fresh short positions with the stop-loss at ₹446. On the downside, supports are spotted at ₹426 and ₹421, which can be the potential near-term targets.

NCDEX-Soyabean (₹3,940)

The March futures contract of soyabean at the National Commodities and Derivatives Exchange (NCDEX) declined last week and breached a key support band between ₹3,970 and ₹4,000.

This also confirms a fresh low in the daily chart, opening the door for further weakness. The MACD in the daily chart is exhibiting a good downward momentum.Thus, traders can short the contract with a stop-loss at ₹4,100. Potential near-term target can be at ₹3,775.

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Published on February 16, 2020
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