Fundamental and technical outlook on commodities: Gold, silver, energy, base metal

Posted online: Saturday, Feb 22, 2014 at 0000 hrs
Precious metal: Gold prices rose on Friday due to disappointing US and Chinese manufacturing data, but over all improvement in Global economic condition and continued stimulus tapering by Federal reserve could dent safe heaven appeal. On the domestic market, traders expected jewellers across Asia to buy on dips, while India's plan to keep tax on Gold importers at current levels could underpin sentiment in the physical market as it will lead to more smuggling. Over all, MCX Gold April future is in consolidation and sustaining on higher levels. For the coming week 29600/29200 will act as a major support whereas 30500/30950 will act as a major resistance level in MCX Gold April future. For the next week in MCX Gold, trader can use buy on lower level strategy, if MCX Gold April future sustain above the levels of 29980 then it could test the levels 30200 / 30500.

Technically, MCX Silver March futures is consolidate and sustaining around higher levels. For the coming week 50500/52165 will act as major resistance levels where as 46800/45950 will act as major support in MCX Silver March futures. For the next week in MCX Silver futures, traders can use buy on lower level strategy, if MCX Silver March futures sustains above 48100 then it could test the levels of 49150/ 50400.

Energy

Crude oil prices rose during the trading hours on Friday as release of Globally positive US data on Thursday lent support to the dollar. Oil futures were likely to find support at USD100.31 a barrel, the low from February 18 and resistance at USD103.28 a barrel, the high from February 19. According to the U.S Energy Information Administration, the supplies rose by one million barrels in the week that ended Feb14 as refiners close down units for seasonal maintenance. We are expecting Crude oil prices to keep in range after a positive US data and lower demand from China. For the coming week 6345/6100 will act as major supports levels whereas 6700/7000 will act as major resistance in MCX Crude oil March futures. For the next week, trader can go for buy on lower level strategy, if MCX Crude March future sustain above 6437 levels then it could test the levels 6535/6700.

Base Metal

"Positive US manufacturing data is supporting the base metal prices, Base metals traded mixed on Friday as robust United States manufacturing data fuelled demand expectations from the world's biggest economy amid demand woes from China after preliminary reading showed manufacturing activity plunged to its lowest level in seven months. Domestic copper prices fell from two-week high following weak manufacturing data from China. The world's second biggest economy consumes almost 40% of world copper and is a major importer of other base metals. Trend of MCX Copper February future is in consolidation and also sustaining around lower levels. For the coming week, it could face major resistance of 456/470 whereas 428/418 could be a major support in MCX Copper. For the next week trader may follow sell on higher levels strategy, if MCX Copper future sustain below 439 levels then it could test the level of 436.70/428.50.

By Vivek Gupta, Director Research, CapitalVia Global Research Limited

NOTE: The views expressed are those of the author