Trading strategies for gold, silver, oil, zinc by Tradebulls Securities

Rupee

The Indian rupee is the worst performing Asia ex-Japan (AXJ) currency for the second consecutive month in November. Rupee weakness came amid a 1.7% m-o-m increase in the foreign reserves to a fresh record high of $448.3 billion as on November 15. This partly explains the net sell-off in Indian government bonds in November versus a net inflow in October. 71.40-71.30 is proving to be strong support for Indian rupee and inspite of weak US Dollar, Indian rupee fails to trade sub 71.50 levels. We anticipate rupee to trade in range of 71.50-72.20 and today’s pause in repo rates will be negative for Indian rupee.

Gold

Gold is stubbornly holding on to the levels of $1450 and any sustained breach with volume can crash the prices till $1430. Volatility is high in precious metals as they are chasing the headline news of US-China trade talk. Non-Farm Payroll data will be next trigger for precious metals. The next resistance is $1489 and $1500, while in MCX it is Rs 38600-38650. On downside, there is strong support at Rs 37500, while the immediate support is at Rs 38000. The best time to buy gold and silver seasonally is mid-December to late February. During the past five years, gold and silver have seen a good upside over this 10-12 week span. 

Crude Oil 

Crude oil gained yesterday after US inventory reported more-than-expected withdrawals. Crude oil is waiting for OPEC meet outcome, which will be the next trigger. The oil minister of OPEC’s second-largest producer, Iraq, said on Sunday that the OPEC+ coalition would discuss cutting another 400,000 bpd to deepen the production restrictions to a total of 1.6 million bpd. There are three scenario for OPEC 1) OPEC+ decides to take no action at this time potentially leaving a decision for March next year. 2) Roll over the cuts as is or 3) extend the deal and deepen the cuts. For Brent to break levels of stiff resistance of $65-$67.5, the final scenario is needed. The resistance for crude oil comes at Rs 4220-4250, while support comes at Rs 4100.

Buy Zinc: TGT Rs 190; Stop loss: Rs 180

Zinc has made a double-bottom at Rs 180 on October 3 and December 3. In December, Zinc made a ‘hammer’ candlestick pattern, which suggest reversal and a follow up candle showed buying strength. LME Cancelled warrant has also increased suggesting more upside. Base metals are nearly at the bottom-end of the cycle and waiting for any positive news from US-China trade war front to gather momentum. RSI_14 is neutral with no divergence. One can buy Zinc with target of Rs 190 and stop loss of Rs 180.

Buy Silver near Rs 43,900; TGT: Rs 45,500; Stop loss: Rs 43,300

Silver is stuck in range of Rs 43900-45000 since two months and we expect high volatility soon. The previous metal has taken multiple supports near Rs 43900-44000. This is the level where we would recommend going long with target of Rs 45500 and stop loss of Rs 43300.

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Disclaimer: Bhavik Patel is a senior technical analyst (Commodities), Tradebulls Securities. He may/ may not hav positions in the commodities mentioned above.