Commodity market outlook: Gold prices are expected to move in a range

Posted online: Saturday, May 03, 2014 at 0000 hrs
Precious metal: Gold prices fell after U.S. employers boosted payrolls in April by the most in two years, cutting demand for the metal as a haven. A decline today would be the fifth straight loss, and the longest slump since April 1. The Federal Reserve reduced monthly asset buying to $45 billion on April 30 with the fourth straight $10 billion cut, and policy makers said further reductions in “measured steps” are likely. Gold prices are expected to move in a range to down for the week over poor physical demand internationally.

Over all, MCX Gold June future is in consolidation and sustaining around lower levels. For the coming week 27700/27000 will act as a major support whereas 28500/29100 will act as a major resistance level in MCX Gold June future. For the next week in MCX Gold, trader can use sell on higher level strategy, if MCX Gold June future sustains below the levels of 28282 then it could test the levels 28050/27800.

Technically, MCX Silver July futures is in consolidation and sustaining around lower levels. For the coming week 42800/44500 will act as major resistance levels where as 38900/36500 will act as major support in MCX Silver July futures. For the next week in MCX Silver futures, traders can use sell on higher level strategy, if MCX Silver July futures sustains below 41500 then it could test the levels of 40200/ 38900.

Energy: Crude oil futures were steady during early European trading hours on Friday, hovering close to six-week lows as markets were jittery ahead of the release of U.S. nonfarm payrolls data later in the day. Futures were likely to find support at $98.10 a barrel, the low from April 23 and resistance at $100.59 a barrel, the high from April 30. Investors were looking ahead to the upcoming April nonfarm payrolls report, which was expected to show that the recovery in the labour market was continuing.

For the coming week 5850/5600 will act as major supports levels whereas 6200/6500 will act as major resistance in MCX Crude oil May futures. For the next week, trader can use buy on lower level strategy, if MCX Crude May future sustain above 6050 levels then it could test the levels 6150/6300.

Base Metal: Copper prices fell to a two-week low, following the release of disappointing data on China’s manufacturing sector and after Federal Reserve decided to taper its monthly bond-buying program by $10 billion for the fourth consecutive meeting. The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.

Trend of MCX Copper June future is in consolidation and also sustaining in range. For the coming week, it could face major resistance of 418/430 whereas 400/389 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 406 levels then it could test the level of 400/392.

By Vivek Gupta, Director Research, CapitalVia Global Research Limited