Outlook on Gold, Silver and Crude by Bhavik Patel of Tradebulls Securities

On MCX, next target for Gold comes around Rs 52,000 where it will see some pullback as it has rallied one way in relative short period of time

Gold bulls are in a rush to make all time high in COMEX. Gold is sustaining above $1850 and is very near to all time high of $1920. In all other currencies, gold is trading at all time high. In short term, prices are overbought so any short term or intra-day traders should wait for any meaningful correction before entering the market and investors with horizon of 2-3 years can buy from current levels too. In MCX, next target comes around Rs 52000 where gold will see some pullback as it has rallied one way in relative short period of time.

Silver has outperformed gold in short term as from its March lows, it has jumped nearly 80 per cent. Covid-19 is double edge sword where demand was hampered but supply was also distrupted. The recent rally in silver is because of supply shock as Chile is one of the top ten countries affected by virus. Another factor for massive rally in silver was technical breakout above $20 as since gold is near to all time high while silver is still far away from all time high so investors felt silver was cheap. The rally has caught many short position holders by surprise and they have squared off their positions triggering massive rally. In MCX, we feel Rs 65,000 is where silver may halt its rally and retrace to consolidate its gain.

Crude oil undertone is bullish and we have seen strong support in range of Rs 3050-Rs 3000. Any long position can be exited below Rs 2900 as that is where we believe bears will take over. On fundamental side, demand is slipping as this is second week when US demand was lower and China is also halting its import as prices are no longer cheap. On supply side we expect OPEC+ compliance around 8.1 million bp/d. Short term resistance comes around Rs 3200 in MCX so any long positions can be booked near that range.

Natural Gas is taking support around Rs 120 in MCX. Despite record demand in June from US, prices failed to sustain above $1.80 as LNG exports are low. We believe we may see rally in Natural Gas after August when LNG exports to Europe will pick up and approach of winter will give bulls some hope. Currently prices are expected to trade between Rs.121- Rs. 130 in MCX and we don’t expect any significant movement on either side.

Recommendation:

Buy Crude | TGT: 3300 | Stoploss: 3000

After trading in narrow range of 3100-3000, crude oil has broken out with volume. Crude oil has been taking support at its 50 day moving average on daily chart since 5th May 2020. So any correction is only possible when crude oil closes below its 50 day moving average. Currently 50 DMA comes around 3050. On Daily scale, crude oil has strong support in range of 3050-3000 so we recommend long positions with expected target of 3300 and stoploss of 3000 closing basis.

Buy Natural Gas | TGT: 130 | Stoploss: 120

Natural Gas has made ‘Bearish belt hold’ candlestick pattern but all the follow up candle shows reversal pattern on daily chart. 120 seems to be the base after recent correction from 144 to 120. Any price action below 118 would trigger more selling but current rally has legs to go till 130. The recent rally can be attributed as relief rally as the primary trend still is negative. So we recommend long with expected target of 130 and stoploss of 120 closing basis.

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Disclaimer: Bhavik Patel is Sr. Technical Analyst (Commodities) at Tradebulls Securities. Views are personal.