Talking Points
Gold and silver traders hold back ahead of US inflation data
Crude oil gives back gains as traders digest overall supply picture
Natural gas extends its recent declines ahead of inventories figures
Gold and silver are teasing traders near critical resistance ahead of upcoming US inflation figures. Meanwhile platinum and palladium have broken out to fresh 2014 highs as geopolitical risks fuel concerns over supply disruptions. Finally the energy commodities are giving back yesterday’s gains, with natural gas hitting the lowest level in more than 5 weeks.
Gold Traders Hold Back Ahead of US CPI
Economists are tipping a substantial uptick for April’s year-on-year inflation reading, with a median estimate of 2.0 percent versus a prior print of 1.5 percent. A significant deviation from expectations would likely stir some volatility for the precious metals. An upside surprise in particular would likely strengthen the greenback, based on traders’ potentially bringing forward rate hike expectations from the Federal Reserve. However, with policy makers seemingly unconcerned about the relatively benign levels of inflation present in the US economy, a shift in stance is unlikely at this stage, meaning follow-through for any move may prove limited.
Similarly Fed Chair Janet Yellen’s upcoming speech may fail to steal headlines. The central banker is set to deliver an address to the US Chamber of Commerce as part of Small Business Week. Unlike her recent testimony to Congress her comments are unlikely to have the same level of focus on the potential path of monetary policy. Dr. Yellen has remained timid on the topic of a rise in borrowing costs, which has done little to aid the US Dollar’s recovery and has afforded gold and silver some breathing room. Until we see a more hawkish stance and stiffer guidance on rate hikes from FOMC officials, gold may be saved from taking its next leg lower. The yellow metal has fallen by close to $80 from its 2014 high in March.
Supply Fears Push Platinum and Palladium Prices Higher
As noted in recent commodities reports; geopolitical risks have likely helped underpin Platinum and Palladium’s recent push higher. Platinum in particular posted a 1.88 percent rally yesterday, the largest single day gain since Jan 2nd. The rally come as newswires report further disruptions to supply from the ongoing strike by mining workers in South Africa, which accounts for over 80% of global production.
Crude Stumbles As Traders Weigh Production Figures
WTI jumped on the back of the DOE’s Weekly Petroleum Status report which revealed the 5th consecutive decline in stocks at Cushing, OK. However, the gains have proven short-lived as traders likely weigh the overall bearish supply picture for the commodity. The inventories report also revealed a rise in total crude stocks to near-record levels, while crude oil production rose further and is at its highest since 1986. Without a lift in demand, continued increases in total inventory levels would help reaffirm a bearish near-term outlook for the growth-sensitive commodity.
Natural Gas Slips Ahead of Storage Figures
Natural gas prices have slid to the lowest since April 1st, as traders await the EIA’s Weekly Storage report, which is tipped to show a rise in stocks by the most since September 2013. Another higher-than-anticipated print could put further selling pressure on the energy commodity based on concerns over a glut in supply. While the buildup likely reflects some seasonal factors, a continued rise in inventories would create a bearish case for natural gas.
CRUDE OIL TECHNICAL ANALYSIS
WTI’s recent recovery leaves a mixed technical bias for the commodity. Prices have pushed above the 20 SMA and the rate of change indicator has shifted into positive territory. However, further gains may be limited given that resistance is looming nearby at 102.30. Additionally, the persistently low levels of volatility (reflected by the ATR) do little to suggest a breakout is on the cards.
Crude Oil: Recovery May Prove Limited With Resistance Nearby
Daily Chart – Created Using FXCM Marketscope 2.0
GOLD TECHNICAL ANALYSIS
Several Doji formations on the daily suggest hesitation from the bears as gold teases at a push above critical resistance at $1,305. With volatility remaining low (as reflected on the ATR), the current environment may favor range-trading setups, which is further supported by a lack of momentum signaled by the Rate of Change indicator.
The DailyFX Speculative Sentiment Index suggests a mixed bias for gold based on trader positioning.
Gold: Dojis Highlight Trader Indecision
Daily Chart – Created Using FXCM Marketscope 2.0
SILVER TECHNICAL ANALYSIS
Silver has edged out a marginal close above resistance at $19.70 following a push off the $19.00 floor. A long upper wick on the most recent daily candle suggests the bulls remain hesitant to push prices higher, which leaves a mixed technical bias for the precious metal.
Silver: Edges Above Resistance at $19.70
Daily Chart – Created Using FXCM Marketscope 2.0
COPPER TECHNICAL ANALYSIS
Copper has vaulted above its descending trendline from the 2014 high and cleared a notable resistance level at $3.085. With building upside momentum (as suggested by the rate of change indicator) and prices above the 20 SMA a bullish technical bias is offered. The push above the $3.149 mark opens an extended advance on $3.213 (the 61.8% Fib Retracement level).
Copper: Aims Higher Following Bullish Technical Signals
Daily Chart – Created Using FXCM Marketscope 2.0
PALLADIUM TECHNICAL ANALYSIS
Palladium has staged an upside breakout above the critical $815 handle with the uptrend for the precious metal remaining intact. Longs are preferred with a target offered by the August 2011 high near $847.
Palladium: Eyeing August 2011 High Following Breakout
Daily Chart – Created Using FXCM Marketscope 2.0
PLATINUM TECHNICAL ANALYSIS
Platinum has finally broken above the descending trendline from the April 2013 high. With building upside momentum (noted by the rate of change indicator), as well as the simple moving average signaling an uptrend, a bullish technical bias is offered. This leaves longs preferred with an initial target offered by the nearby $1,486 mark, with a break higher to open up $1,535.
Platinum: Finally Breaks Trendline Resistance
Daily Chart – Created Using FXCM Marketscope 2.0
Written by David de Ferranti, Currency Analyst, DailyFX
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.Learn forex trading with a free practice account and trading charts from FXCM.
Source: Daily fx
