In the commodity market, gold did not witness much of volatility whereas silver and crude oil saw a considerable decline in price last week.
In terms of dollars, gold ($2,516 per ounce) posted a marginal gain of 0.5 per cent. Silver ($27.9 per ounce) is down 2.1 per cent and crude oil ($71.5 per barrel) tumbled 9.3 per cent. Below is an analysis of the MCX futures of these commodities.
MCX-Gold (₹71,426)
Gold futures (October) has been tracing a sideways trend over the last three weeks. It has been oscillating between ₹71,100 and ₹72,300.
Nevertheless, the contract remains above the support at ₹71,000 and is now hovering just above the 20-day moving average (DMA). So, the price action shows a bullish bias.
If the contract breaks out of ₹72,300, it can move up to ₹75,000. On the other hand, a breach of the support at ₹71,000 can drag gold futures to ₹68,800.
Trade strategy: Since the inclination is bullish, traders can buy gold futures at ₹71,400. Place stop-loss at ₹70,500.
When the contract rises above ₹72,500, revise the stop-loss to ₹71,200. On a rally to ₹73,600, tighten the stop-loss to ₹72,200. Exit at ₹75,000.
MCX-Silver (₹82,757)
Silver futures (December) fell off the resistance at ₹88,700 recently. Last week, it slipped below ₹85,000 and the 20-DMA, a bearish sign.
However, the contract has a demand zone between ₹80,000 and ₹80,800. Also, ₹82,500 is a minor support. So, in the short-term, there is a chance for silver futures to retest ₹88,700.
In case the support at ₹80,000 is breached, the short-term outlook can turn bearish. In that scenario, the price can drop to ₹78,350, a support. Subsequent support is at ₹76,000.
Trade strategy: Stay off for now. Go long if silver futures drop to ₹80,800. Place stop-loss at ₹79,000. When the price rises to ₹86,000, alter the stop-loss to ₹84,000. Exit at ₹88,000.
MCX-Crude oil (₹5,704)
The September crude oil futures saw strong sell-off over the past week. The contract slipped below the key support at ₹6,000 and fell sharply to close at ₹5,704 on Friday.
While the price action is clearly bearish, the contract has a demand zone at ₹5,400 and ₹5,500. This price band has held true since early 2022, indicating its strength.
That said, a breach of the ₹5,400-level can potentially lead to another leg of sharp sell-off. Such a downswing can take the contract to ₹4,850, a support. Next support is at ₹4,600.
In case the crude oil futures rebound from ₹5,400-5,500 price region, it can rally to ₹6,000. A breakout of ₹6,000 can lift the contract to ₹6,500.
Trade strategy: At the moment, the trend is bearish. However, there is a support band ahead and the risk-reward ratio is unfavourable for fresh short positions now.
At the same time, to consider long trades, the contract should start showing signs of a reversal. But as it stands, there are no such indications. So, given the prevailing conditions, it is better to refrain from taking fresh trades.