Weekly Commodities Wrap

Gold Hits Fresh 19 Month Low But Recovers Slightly On US Dollar Pull Back

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Gold

The yellow metal fell to a fresh nineteen month low this week before posting a mild recovery later in the week as the US Dollar conceded some of its recent gains. The pullback in USD is attributed to news of talks between the US and China over their ongoing trade conflict. It has been announced that a delegation from China, led by Wang Shouwen, the Vice Minister of Commerce, will meet with US representative led by David Malpass, the Secretary of Treasury for International Affairs. While the talks do not promise anything, following Trump’s successful visit with EC president Juncker, the market is hopeful that this can be the start to scaling back the tariffs and barriers currently in place on both sides.

forex gold
forex gold

After breaking down through the July 2017 low at 1205.29, gold is now sitting between that level and support at the 2016 low of 1122.13. For now, bias remains weighted to the downside with only a sustained breach back above the 1235.95 level alleviating immediate negative pressure.

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Silver

The price of silver tracked the moves seen in gold this week plummeting to its lowest level since July 2017 before posting a small recovery. Silver has been hard hit by the recent US Dollar rally which has seen the metal posting its tenth consecutive losing week, its longest consecutive losing streak in decades. While some investment banks are highlighting a better medium-term outlook for silver based on demand from the auto sector, for now, silver remains firmly under pressure.

forex silver
forex silver

Silver prices are now sitting just above the 2017 low at 14.1103 with little to suggest that we won’t see a test of the level in the coming weeks. To the topside, any retracement higher is likely to find resistance at a retest of the broken 15.6552 level support which has been a major level in silver over recent years.

Copper

The red metal was hard hit once again this week, falling to its lowest level since June 2017 on a combination of elevated uncertainty surrounding the Turkish currency crisis, weak Chinese economic data, and a stronger US Dollar. However, similar to what we’ve seen with gold and silver, the red metal was able to post a recovery late in the week due to the potential for a resolution in the trade dispute between the US and China. The ongoing trade dispute between the US and China, the largest global consumer of copper, has put significant downward pressure on copper as investors.

forex copper
forex copper

Copper prices are now sitting just ahead of key support at the 2.442 – 2.505 level which was the mid-2015 low and the 2017 lows with the rising trend line from 2016 lows coming in at the same level.  To the topside, the line in the sand is the 2.766 level, the price will need to break back above this level to alleviate near-term bearish bias.

Iron

Iron ore prices fell back again this week, disappointing bulls which had been encouraged by the strongest rally over the last few weeks. The move was largely linked to weakness in Chinese data as the latest release showed fixed-asset investment fell to its slowest pace on record in July while retail sales also declined.

forex iron
forex iron

After surging to just shy of $70, iron ore prices fell back this week and are now testing the broken $69 resistance which is now acting as support. If prices break back below this level, the $63 level support will come into focus.

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