MCX Gold August futures may touch Rs 49,000 on heightened risk sentiment

Tapan Patel

Commodity prices were mixed as bullion prices continued the upside while Crude oil prices traded lower during last week. Base metals complex traded mixed with Copper, Aluminium and Lead prices reporting gains while Zinc and Nickel witnessed selling. The decline in dollar index and rising virus cases kept commodity prices volatile for the week.

Bullion prices traded strong for the third consecutive week on safe-haven buying on heightened risk sentiment amid fear of slower economic recovery. The spot gold prices at COMEX rose by more than 1 percent ended at $1,771 per ounce for the week. The rapidly rising virus cases in the US, Beijing, Australia and South Americas sent bullish signal to the investors.

Gold prices rose sharply amid hopes of further stimulus measures which may raise demand for gold for dollar debasement. The Gold ETF holdings continues to hit highs as holdings at SPDR Gold Shares rose to 1,178.90 tonnes on Friday.

Gold prices may continue to trade higher in medium term as COMEX spot Gold prices are set to hit $1800 per ounce. Prices are facing near term resistance at $1,780 per ounce with support at $1,760/$1,740 per ounce. At MCX, Gold August prices have near term resistance at Rs 48,600 per 10 grams and support at Rs 47,600 per 10 grams. MCX Gold August futures may touch Rs 49,000 per 10 grams this week.

Crude oil prices witnessed selling in previous week with benchmark NYMEX WTI crude oil prices struggled to sustain above the key resistance level of $40 per barrel. Crude oil prices were weak on worries over fuel demand recovery and rising inventories at US. Crude oil prices traded under pressure after other parts of the world apart from US and Beijing reported sudden rise in cases which dampened the hopes of demand recovery.

The continuous rise in US crude oil inventories due to arrival of Saudi oil shipment also kept upside limited in oil prices despite output cuts from OPEC plus nations. The total crude oil rigs fell by 1 to 188, giving a pause to the hefty declines in numbers, as per data published by Baker Hughes. The WTI Crude oil prices are currently witnessing strong resistance at $40 per barrel.

We expect oil prices to continue to trade in the upper range of $36 to $40 for the week as rising virus cases may limit prospects of fuel demand growth. Prices may achieve $48 levels in medium term with sustainable trade above $40. MCX Crude oil July future contract has important resistance at Rs 3,390 per barrel and support at Rs 2,680 this week.

Base metals prices traded mixed during the week with Copper prices extended gains rallying for the six weeks on the trot. The Aluminium and Lead prices reported marginal gains while Zinc and Nickel prices ended in red for the week.

Copper prices rallied on the strong bullish case with concerns of supply disruption and falling inventory levels. The sudden rise in virus cases in key copper producing region in South Americas added buying in copper on concerns of halt in supplies. Copper prices rallied above $6,000 per tonne at LME with continuous decline in inventory levels. Copper inventories at SHFE fell by 9,998 tonnes during the week.

We expect Copper prices to trade positive this week. LME Copper prices have important resistance at $6,120 per tonne with support at $5,690 per tonne. MCX Copper prices are trading strong forming near term bottom at Rs 430 per kg. MCX Copper July futures have near term resistance at Rs 465 per kg with support at Rs 450 per kg for short term

-Published on June 29th, 2020