Weekly Commodities Wrap: Cautious Fed Keeps Metals Buoyant

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Gold:  Weaker US Dollar Keeps Gold Bid

The price of gold remained positive this weeks as the market moved around a widely expected “unchanged” decision from the Fed. Convening for their November meeting, the FOMC judged that given the continued pace of economic momentum, which is deemed to be rising at a “solid pace”, it was appropriate to maintain policy at current levels. The Fed’s guidance regarding the rate path, remains consistent with their previous communication, indicating their commitment to gradual rate rises.

Gold has been under pressure over the last few weeks as investors have reacted positively buoyant US data and diminished geopolitical risk from the situation regarding North-Korea and the US. Despite the bid tone this week, the outlook for gold is clouded as investors are still preparing for a December US rate hike.  Market pricing for a December move is now north of 70% which will undoubtedly weigh on the precious metal as we move nearer to the end of the year.

For now, gold remains stable above the local support of 1260.58 which is the October low. While above here, focus remains on a further run to the topside with the next key resistance coming in at 1295.70s which has been a key pivot over the year and strong resistance over the summer.

Silver: Momentum Remains Lacking Amid Absence Of Directional Catalysts

After a strong rally last week, silver prices stalled this week with weaker US manufacturing data. Industrial readings were widely expected to disappoint in the wake of a destructive US storm season though for the most part, it seems that a strong downturn has been avoided.

After testing the rising trend line of a larger triangle pattern, price has since turned upward though momentum has stalled this week. The current layout suggests that focus will remain on further upside. The local October swing high around 17.4569 will be the initial upside focus with deeper resistance at the descending trend line of the triangle pattern.

Copper: BHP Billiton Forecast Further Rally

The red metal rose again this week, tracking the broader commodity complex move fuelled by a weaker US Dollar. On the back of a soaring rally this year, the world’s second-largest copper mining company, BHP Billiton, has said that it expects copper prices to continue to rise over coming yeas driven by increasing demand linked to electronic vehicles. The mining giant said, “The expectation is that the next generation of electric vehicles, which will have even more automation, will require even more copper,” adding that it expects 2017 to be the “tipping point” for electric vehicles.

Industry analysts have recently expressed their skepticism regarding further copper upside as the surge in prices is expected to bring further output operations into play over the coming year. However, with demand steady in China and global growth continuing to firm, the demand environment looks stable which should keep copper underpinned.

After retesting the broken bearish trend line from 2011 highs, copper has since turned north again and is now sitting just below the mid-2014 swing high around 3.264. The recently broken 2015 swing high, around 2.963, should provide support if retested and while above here focus remains on further upside.

Iron: Recovery Rally Inspires Bulls’ Hope

In the wake of recent declines, iron ore bulls will have welcomed the modest recovery in prices this week which saw Iron ore rebounding off recent lows. The recovery is linked to a rebound in high-grade ores in China ahead of the implementation of air quality controls in mid-November which are set to take an impact on mill production.

This week’s rally has seen price rising back to just below the $60 mark which will be the first key resistance in this current phase. If this level provides supply, focus will remain on a run down to the year-to-date lows around the $52 mark.

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With over 6 years’ experience analysing currency markets, James is now a well-known industry analyst focusing on price action trading and fundamental drivers. Beginning as a private retail trader, James developed a strong interest in understanding the fundamental aspect of the market before pursuing technical trading capabilities which he now uses to identify opportunities over a short-term horizon. Alongside his market experience, James is also IMC certified having achieved the qualification to help further his understanding not only of the markets but the industry as a whole. James has a strong interest in both fundamentals and technicals and uses both forms of analysis in generating and executing trade ideas, with trades generally lasting from a few hours to a few days.

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With over 6 years’ experience analysing currency markets, James is now a well-known industry analyst focusing on price action trading and fundamental drivers. Beginning as a private retail trader, James developed a strong interest in understanding the fundamental aspect of the market before pursuing technical trading capabilities which he now uses to identify opportunities over a short-term horizon. Alongside his market experience, James is also IMC certified having achieved the qualification to help further his understanding not only of the markets but the industry as a whole. James has a strong interest in both fundamentals and technicals and uses both forms of analysis in generating and executing trade ideas, with trades generally lasting from a few hours to a few days.

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