The precious metals witnessed a buying frenzy as players adopted a flight-towards-safety approach in the commodities markets.
Terror attacks, military strikes, geopolitical tensions and widening deficit in the USA saw a flight of capital from higher risk vehicles such as stocks into relatively safer “hard assets” like gold and silver. I feel much will depend on the prices of crude in the coming week as the black gold is likely to be a pivot around which the other commodities will revolve as far as immediate trend determination is concerned. I suggest going with the flow and remain positively biased towards precious metals.
Agri commodities: Chana has been unable to surpass the Rs 2,320 level to signal an improvement in the outlook even in the near term. It is likely to witness selling at advances and the possible support in the coming week will be at the Rs 2,200 mark.
Long positions must be avoided for now. Kapas Khalli is witnessing buying momentum as the Rs 350 levels have been surpassed on high volumes. I feel this counter will remain firm in the coming weeks and long positions may be initiated on declines.
Mentha oil has witnessed profit sales. This commodity has a very high beta and the prices are likely to consolidate at the Rs 600-510 levels in the coming days. Refined soya oil is showing signs of bullishness and a possible recovery after a steep fall. However, no fresh long initiatives may be taken unless the Rs 424 levels are overcome on high volumes.
Metals: Aluminium has started to perk up and maintain levels above the Rs 120 mark. However, the intraday range is still very tight. Await a breakout above the Rs 123 levels with high volumes to cause a stir on the upside.
Copper has held ground above the Rs 370 level and traded volumes are also buoyant. As long as the Rs 360 mark is not violated in the coming week, I feel the outlook remains positive. Gold has finally surged past the Rs 10,000 barrier and that too with fair volumes.
The price of gold is likely to be influenced by the US dollar, crude prices and geopolitical/ military issues that have hounded the markets last week. The overall outlook remains positive and I feel the yellow metal will outperform silver.
Silver is likely to remain bullish as long as the Rs 17,600 levels are not violated downwards. Short-term traders may hold this metal till the Rs 17,500 levels are not breached. I feel the metal is poised to test the Rs 19,000 psychological barrier in the short/ medium term.
Energy: Crude is now trading at new highs and the same is on good volumes. The Rs 3460 level is likely to be a short-term base, below which fresh buying may emerge in larger lots. While profit sales at higher levels cannot be ruled out, the triggers are all pointing towards a bullish outlook. The hurricane season and rising geo political tensions are likely to keep prices high. I suggest buying on major declines for the patient and disciplined investor/ traders.
(The author is the CEO of BSPLindia.com. He is a Mumbai-based investment consultant and invites feedback at vijay@BSPLindia.com or (022) 23438482 / 23400345).
Mandatory disclosure: The analyst has no exposure to the commodities mentioned above at the time of writing this article.
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