Outlook & trading strategies for Copper, Gold by Tradebulls Securities

The Indian rupee is trading at a historic low after the US dollar index surpassed 103 when buying a safe haven. The coronavirus lockout will seriously affect the Indian economy and our stock market is the second most corrected market in the world after Brazil. So the Indian currency is feeling the heat and that is why we have seen a rapid depreciation of the rupee. The Reserve Bank of India (RBI) tried to intervene and sold nearly $ 3 billion in the Forex market to reduce volatility, but we think that, until the market recovers, we might see the Indian rupee stay under pressure.

Gold this week had a stellar rally in which two trading sessions saw a boost of nearly $ 100 after the US Fed released massive stimulus packages and unconfirmed information that prices at cash in London have become unreliable. This prompted large European traders and traders to position themselves on COMEX futures. Gold is generally traded higher due to fear factors and now that the US dollar index returns, we are witnessing a new surge in gold. Silver, on the other hand, is underperforming as it is an industrial metal, but after being in such an oversold region, we expect silver to also gain behind the rush towards gold.

The travel lockdown and ban has hurt prospects for crude oil demand. At its peak, demand for oil could drop by 15 to 20 million barrels a day in the coming weeks. There are nearly 750 million barrels of crude oil stocks on land and at sea, which will drop to 1 billion in the coming weeks. After March 31, OPEC and non-OPEC countries would increase production so that the world had more oil than it could consume. All of the bad news has been taken into account by the market and we do not expect Brent to trade or stay below $ 23. We expect crude oil to trade between $ 26 and $ 34 in the future.

Buy gold: TGT: 43,500 | Stoploss: 40800

Gold, after taking over its 200 DMA on the daily chart, has recovered well. RSI_14 is greater than 51, so the trend is upward. Gold on a daily basis trades above 50 DMA and near its 20 DMA. ADX is showing upward momentum, so we expect prices to hold at 43,500. We recommend a long position close to 42,000 next June for the target of 43,500 and a stoploss of 40,800

Buy Copper: TGT: 388 | Stoploss: 360

The copper, after trading in the oversold area, recovered while RSI_14 rebounded to 27 from 15. It is still in the oversold area, but the ADX showed a buy signal. Prices, which were far from its short-term moving average, must move closer to the moving average for the average reversion to take place. We recommend buying next April around 368 for the goal of 388 and stoploss of 360.

Disclaimer: The author is a senior technical analyst (commodities) at Tradebulls Securities. The views are hers.


Leave a Comment