Talking Points:
Gold weakened further ahead of Bank of England’s meeting
Oil sustains gains though downside risk looms with API report
Copper rebounds as volatility wanes while Asian equities post gains
Commodities gained across the board as Asia started the day with risk-on mood: Shanghai Composite is up 0.5 percent while ASX and Hang Seng are up over 1.2 percent. Australian dollar consistently rose on bets that the Reserve Bank would not cut rate, which turned out true.
Gold descended on a fourth day into a region crowded with past support levels. It stabilizes above a support at 1132.4. Lower moves are possible as bearish sentiment dominates gold trading coming up to Bank of England’s meeting and Inflation report on Thursday. The central bank, together with the U.S. Federal Reserve, is thought to be considering interest rate hike in the near future.
Oil sustained gains and stayed firmly within the range 45.37-46.79 for the fourth day. A third attempt and then retreat from the 46.79 resistance made it a triple top that will prove hard to break. However downside risk is looming for oil as weekly stockpile report by the American Petroleum Institute today may show increasing crude build on a sixth week.
A notable news on physical side is the request by TransCanada to suspend U.S. application for Keystone XL pipeline, due to a state review in Nebraska. The project would help to relieve a US supply glut.
Copper bounced higher after yesterday’s recovery, headed toward 2.3305 resistance level. Gains in Asian equities have been uplifting to copper prices and today is no exception. Copper volatility has fallen sharply since the beginning of October, while copper traded range-bound on COMEX. Nevertheless, outlook for China’s economy remains influential and a source of downward pressure to copper prices.
Falling copper stocks in warehouses tracked by London Metal Exchange have been a saving grace coming from lower prices and uncertain demand. The waning supply may retain copper above the 2.200 floor.
GOLD TECHNICAL ANALYSIS – Gold touched down to 50% Fibo and support at 1133.3 yesterday, before it bounced up today. Downward momentum is stubbornly sticky and lower moves are possible. Next support level comes at 61.8% Fibo at 1119.5. The bears will likely see their positions strengthen until an event risk via Bank of England.
Daily Chart – Created Using FXCM Marketscope
COPPER TECHNICAL ANALYSIS – Copper bounced ahead of 2.2730 support level yesterday. It is heading up to 5-day moving average at 2.327 and a change to upward momentum promises higher moves in near future. The bulls may aim for profit target near 20-day moving average at 2.366. All eyes are on the upside this week.
Daily Chart – Created Using FXCM Marketscope
CRUDE OIL TECHNICAL ANALYSIS – Oil traded in the range of 45.37-46.79 on a fourth day. A third attempt and failure to breach the upper bound made it a triple top and firm resistance. Range trades will likely continue unless weekly stockpile reports by API today and EIA tomorrow present big downside surprise.
15-minuteChart – Created Using FXCM Marketscope
— Written by Nathalie Huynh, Currency Strategist for DailyFX.com
Contact and follow Nathalie on Twitter: @nathuynh
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
