Gold failed to go below 49,000 levels and is now back above 50,000. Support has come around $1,850 and now it is important for gold to move above $1,915. The recent correction is welcome in gold as it gives us opportunity to buy at lower level. Historically, we have seen that gold rarely sustains after 37 per cent rally so this correction was expected and we believe that the next catalyst for gold would be the US presidential election. In the short-term, USD movement is also crucial. Any strength in US dollar will keep pressure on gold prices and we don’t expect any runaway rally right now but gold to consolidate in the range of 49,000-53,000.
If you are looking at safety trade, you should not trade silver. If we can turn around a break above the $24 level, we will more than likely go looking towards the 50-day EMA, which is just below the $25 level. The primary trigger for silver would be US dollar and movement of Gold. Silver will follow gold. I would rather go for gold rather than trading in silver. Silver is more volatile and more prone to corrections. With economic recovery in jeopardy, silver will fall more than gold so we advise to trade in safe asset like gold more.
Oil prices came under pressure as gasoline inventories climbed. High gasoline inventories means we may see more production in crude and rise in Covid-19 cases have already kept prices under pressure. Restart of Libyan production is also keeping prices under check. The narrow range of 2,900-3,000 has been broken and prices have now shifted below 2,900. Next support comes around 2,830 and then 2,700. Among many other issues, the November 3 contest will determine the path of energy policy in the US, the world’s leading oil and gas producer. Falling production and declining US stockpiles have balanced the crude oil market and are keeping the price of Brent and WTI nearby futures around $40 per barrel level, which is a pivot point for the energy commodity. OPEC+ are waiting for November 3 election. After sell-off and trading in lower range of 2,900, we expect crude to bounce again till 3,000-3,050 before once again we might see fresh selling positions getting accumulated. So our bias is on bearish side and we recommend sell on rise until 3,200 is not breached in MCX.
Gravity hit the natural gas market in October as its contract got expired and rolled over in November contract. Injections have been rising over the past two weeks. Only eight weeks to go until the 2020/2021 withdrawal season. The latest inventory data from the Energy Information Administration was a reminder that there is plenty of natural gas in storage to meet requirements even if the winter of 2020/2021 is colder than the average. One of the biggest reasons why October will be more volatile than September is that as we go into the end of the shoulder season, weather becomes a bigger factor, especially by mid October when early November forecasts become available. Weather outlook remains bearish for the prices as there are not chances of cold wind approaching.
Sell Natural Gas | TGT: 180 | Stop loss: 205
Natural Gas has given sell crossover of 20 and 50 EMA on daily scale. It has also breached its support of 190 and momentum oscillator RSI_14 is also trading below 50 (i.e. at 40 now). So all indicators point to weak trend. After strong sell off we expect Natural Gas to retrace around 192-193 where short positions can be taken with expected target of 180 and stoploss of 205.
Sell Lead | TGT: 142 | Stop loss: 150
Lead has been making lower high and lower low on daily scale which is indication of bearish trend. It is also trading below 20 and 50 DMA. Next support comes around 200 DMA which is around 142 levels. Any bounce near 148 is being sold into indicating bears strong hold on the commodity. Only closing above 150 can we see bullish upside momentum. So we recommend to sell around 148 for expected target of 142 and stoploss of 150.
Disclaimer: Bhavik Patel is Sr. Technical Analyst (Commodities) at Tradebulls Securities. Views are personal.