Commodity Focus By Kotak Securities

If prices sustain above the 196 level, there is potential for a short squeeze, with prices possibly testing the 203 level and even reaching the 206/207 range. This movement can be seen as a corrective rise within a broader downtrend. However, a decisive break below the 196 level would be negative, likely resuming the downtrend and opening the possibility of prices falling to the 180/182 zone in futures.

"Confidence without clarity can be disastrous” GOLD: “Healthy price pullback” Positional trend: Bullish Support levels: 72,200 & 72,100 Resistance levels: 73,500 and 74,000 Gold experienced a significant pullback yesterday, primarily driven by long liquidation. This decline may be attributed to the news that the Chinese central bank has paused its gold-buying activity for the second consecutive month in June. This week's focus will be on the US Fed Chairman's testimony to Congress and the US retail inflation data. The recent drop in gold prices appears to be a profit-taking pullback within a broader uptrend. Therefore, our positional outlook remains bullish. The key support level that bulls need to defend is yesterday's low, around 72,100. If this level is breached, it is advisable to move to the sidelines and reassess the situation. On the upside, the key resistance levels to watch are 72,850 and 73,500. Silver: "Price pullback an opportunity for bulls" Positional trend: Bullish Support levels: 92,500 & 92,000 Resistance levels: 94,200 and 96,550 Similar to gold, silver prices also dropped due to profit-taking. However, silver's rebound has been significantly quicker, demonstrating strong relative outperformance compared to gold. Traders with a higher risk appetite may find silver more attractive than gold. Silver offers a diversified play on bullion, currencies, and base metals. As long as the US Dollar continues to weaken and base metals rise, stronger gold prices should sustain silver's relative outperformance. However, traders must exercise flexibility and robust risk management to navigate silver's high volatility. Indiscipline in this market can be very costly. Our positional view on silver remains bullish. The key support level that silver bulls need to defend is yesterday's low of 91,850/900. If this level is breached, it is advisable to move to the sidelines and reassess the situation. On the upside, the key resistance levels to watch are 94,200 and 96,550. Crude Oil: “On calmer waters” Positional trend: Neutral. Focus on range play strategies Support levels: 6800 & 6700. Resistance levels: 6900 and 7050. As we anticipated, the risk of a post-hurricane price drop seems to be materializing. Tropical Storm Beryl, which initially made landfall in Texas as a Category 1 hurricane, has been downgraded due to decreased wind speeds and now appears set to dissipate without impacting US domestic crude oil production. The market bias is now neutral, with no fresh triggers likely to drive prices significantly in either direction. Key levels to watch are 6800 and 6700 on the downside, and 6900 and 7050/80 on the upside. Traders can play this broad range of 6700/6800 to 7050/80 for the next few days. For short positions, place stops above the range high, and for long positions, place stops below the range low. Additionally, straddle and strangle shorts can be executed via crude oil options, but it's crucial to maintain adequate stop losses. For traders with lower risk appetites, consider hedged strategies like short iron fly strategies. Natural Gas: “Oversold conditions” Positional trend: Bearish but witnessing a counter trend rebound Support levels: 196 & 182. Resistance levels: 203 and 207. After eight consecutive sessions where prices consistently breached the previous day's low and closed below it, we observed a tentative attempt at short covering yesterday. While this attempt remains modest, the market appears to be oversold. We could witness significant short covering as LNG exports resume post-hurricane disruptions. Although the cooling impact from hurricane rains may temper this effect, it is unlikely to prevent a short covering bounce from these oversold levels.

*Guar Update* Guar seed futures (Aug) closed about 1% higher last week supported by weak start to sowing season in Rajasthan. According to Agri Department, guar seed area in Rajasthan is 9.37 lakh ha as on 8th July compared to 10.32 lakh ha last year at the same time. As per Agmarknet data, the arrivals last week were down to 1,564 tons Vs 1,060 tons in the previous week. In Jun, arrivals recorded at 6,850 tons mostly unchanged from the last year arrivals. As per IMD, Western Rajasthan receives normal rains as it receives only 71.5 mm vs normal of 74.50 mm. As per APEDA, Guar gum exports in May 2024, up by 37.80% y/y at 48,420 tons Vs 35,150 tons last year. The exports up 22% m/m. In 2024 (Jan-May), India exported about 1.97 lakh tons of guar gum, up 37.4% y/y vs 1.43 lt. Currently, Guar Aug is trading above the weekly resistance of 5,430 and support at 5,300 levels. Prices may trade higher towards 5,650 if it sustains above the resistance levels. Disclaimer - https://www.kotaksecurities.com/discla

KCALRT : INTRADAY: SELL MCX COPPER JUL AT 876 TP 871.50 SL 879 (CMP-876) Disc: https://www.kotaksecurities.com/disclaimer/commodities - Kotak Securities

KCALRT : INTRADAY: BUY MCX SILVER SEP AT 93400 TP 93850 SL 93100 (CMP-93400) Disc: https://www.kotaksecurities.com/disclaimer/commodities - Kotak Securities

KCALRT : INTRADAY: BUY MCX CRUDEOIL JUL 6900 PE AT 111 TP 140 SL 91 (CMP-111) Disc: https://www.kotaksecurities.com/disclaimer/commodities/ - Kotak Securities

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