Gold August futures likely to face resistance at Rs 48,500 per 10 gram

Tapan Patel

Commodity prices traded strong as crude oil prices witnessed buying spree, gaining the most, while base metals traded firm on demand recovery hopes. Bullion prices traded positive amid cautious investment approach as rising virus cases kept investors at edge.

Bullion prices traded extended gains for last week as investors turned cautious over concerns of slower-than-expected economic growth amid record virus cases. The spot gold prices at COMEX rose by 0.76 percent rallying to $1,750 per troy ounce on increase in risk sentiments. The Gold ETF holdings at SPDR Gold Shares rose to 1,159 tonnes on Friday. Gold prices may continue to trade higher in medium term with expansion of FED balance sheet as US Fed officials signalled longer time for economic recovery.

COMEX spot Gold prices are set to hit another bull run. At MCX, Gold August prices have important resistance at Rs 48,200/48,500 per 10 gram and support at Rs 47,500. COMEX spot silver prices are struggling to sustain above $18 per troy ounce while prices may see $18.40 as strong resistance in short term

Crude oil prices witnessed strong buying during the week with benchmark NYMEX WTI crude oil prices rallied by more than 9 percent to $39.75 per barrel while ICE Brent oil prices ended 9 percent up to $42.19 per barrel during last week. Crude oil prices traded higher on demand growth prospectus with effective output cuts from OPEC plus nations. The US crude oil and natural gas rigs count continued to hit lows as many of US energy firms have shut productions. The total crude oil rigs fell by 10 to 189, as per data published by Baker Hughes.

The WTI Crude oil prices are currently witnessing strong resistance at $40. 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 for the coming week.

Base metals prices traded positive during the week with Zinc prices rising the most among the complex followed by Copper, Lead and Nickel. Base metals prices witnessed some selling pressure in the second half of the last week with rise in virus cases in Beijing. Aluminium prices remained under pressure on ample supply and slower demand growth. Copper prices traded firm with decline in inventories and fear of supply disruption from Chile. Copper inventories at SHFE fell by 18,162 tonnes during the week.

We expect Copper prices to trade positive in coming week. LME Copper prices are facing resistance near 100-day moving average at $5,920 a tonne on weekly charts. The break above $5,920 may lead prices towards $6,055 and $6,200 in short to medium term perspective with support at $5,600. MCX Copper prices are trading strong after giving breakout above Rs 425 per kg. Prices have made temporary bottom near Rs 430 while prices may see Rs 459 levels with breakout above Rs 452

-Published on June 23rd, 2020