Time to be cautious
A correction might occur
Gold and silver extended the rally last week. In terms of dollars, gold and silver appreciated 0.6 per cent and 1.5 per cent last week as they closed at $2,343 and $27.90 per ounce respectively.
Similarly, on the Multi Commodity Exchange, gold futures gained 1.9 per cent to end at ₹71,843 (per 10 gram), whereas silver was up 2.4 per cent to close at ₹82,813 (per kg).
MCXGOLD (₹71,843)
Gold futures (June contract) appreciated and hit a record high of ₹73,958 on Friday before ending the week lower at ₹71,843.
Even though the uptrend is steady, the contract formed a bearish pin bar on the chart on Friday. While this does not confirm a bearish reversal, there is a chance for price moderation.
On the downside, there are support levels at ₹70,000 and ₹68,500. But if bulls regain momentum and push the price up, gold futures can hit ₹75,000 soon.
Trade strategy: The uptrend is steady. But there is a chance for a minor correction in price, given Friday’s intraday movement. So, we recommend staying out for now.
MCXSILVER (₹82,813)
The close above ₹80,000 on April 5 gave a boost to silver futures (May series). It went up last week and hit a record high of ₹86,126 on Friday before closing at ₹82,813.
Like gold futures, silver futures too has formed a bearish pin bar candlestick pattern on Friday, hinting that the price could soften from here. However, the overall trend is up and the downside movement, if any, can be limited.
If the uptrend continues from here, we can expect silver futures to hit ₹90,000. On the other hand, if the contract dips from the current level, it can find support at ₹80,000 and ₹77,800.
Trade strategy: Silver futures could see a dip in price. But the broader trend is bullish, which can restrict a fall. We suggest staying out given the prevailing conditions.
Crude oil prices saw a marginal drop over the past week. Brent crude oil futures on the Intercontinental Exchange (ICE) was down 0.8 per cent by closing at $90.2 per barrel. Crude oil futures on the MCX lost 1.2 per cent by ending the week at ₹7,153 a barrel.
BRENT CRUDE FUTURES ($90.2)
Brent Crude futures, although produced negative return last week, was largely moving in a sideways price band through the week. It was held between $89 and $91.
That said, the broader trend remains up. We expect crude oil futures to regain traction and go up to $96 soon. A breakout of this level can take the contract to $100.
On the other hand, if the contract slips below $89, it can find support at $85. Only a breach of this will turn the nearterm trend bearish. Immediately below this level, support levels are at $84 and $81.
MCXCRUDE OIL (₹7,153)
Since the April futures are nearing expiry, we consider the May contract for the purpose of analysis. This has been in a sideways crawl since the beginning of last week.
The May crude oil futures has been oscillating between ₹7,060 and ₹7,250. Immediately below the range bottom is a support of ₹7,000 where the 20day moving average coincides. Subsequent support is at ₹6,730. So long as this level holds, the bias will be bullish.
Since the broader trend is bullish, we expect the contract to surpass ₹7,250 and head north towards ₹8,000, a resistance. Note that ₹7,800 is a minor hurdle.
Trade strategy: Last week, we suggested longs at ₹7,284 on April crude oil futures. Roll the longs over to the next expiry.
That is, exit April contract now at ₹7,187 and simultaneously buy May futures at ₹7,153. Add longs if the price dips to ₹7,000. Place initial stoploss at ₹6,850. On a rally to ₹7,800, raise the stoploss to ₹7,600. Book profits at ₹7,900.