Weekly Metals Wrap: Gold Prices Lower Despite Weaker US Dollar

As Equities Rally To Fresh Highs

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forex metals

Gold

Gold prices remained stable this week, posting a second consecutive positive week after weeks of heavy selling took gold down to levels not seen since summer 2017. The weakness comes despite a weaker US Dollar which remains soft in the wake of Fed chair Powell’s speech at Jackson Hole last week. Powell’s message was one of caution as he reaffirmed the Fed’s commitment to maintaining a data dependant stance. While the speech was in no way dovish, the market simply reacted with disappointment as the Fed chair gave no indication that the Fed would be stepping up the pace of its policy tightening.

gold

After breaking down through the July 2017 low at 1205.29, gold is now retesting that broken support level and fighting to get abck above it. If price falls back below there, focus will turn to a test of 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

Silver prices have also been under pressure this week, tracking the moves seen in gold. Despite increased geopolitical tensions and volatile issues such as the economic crisis in Turkey, earnings in the US have remained solid, keeping equity markets supported as they continue to soar to fresh highs. The risk on environment is keeping investors out of gold and silver with those holding long exposure cutting their positions ahead of the long weekend in the US.

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 under pressure once again this week after posting a recovery last week. Despite the weaker US Dollar, concerns regarding the ongoing trade dispute between China and the US continues to weigh on investor sentiment. Following the failure of last week’s talks between mid level officials from both country, the US is pressing ahead with plans to implement further tariffs of around $200 billion by the year end, which is clouding the outlook for copper as investors anticipate a drop in manufacturing and construction as a consequence.

copper

Copper price is still 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 2.767 level, the price will need to break back above this level to alleviate near-term bearish bias.

Iron

Iron ore prices bucked the trend seen across the metals complex this week. After trading down to fresh one-month lows earlier in the week, iron ore prices spiked higher midweek, posting their largest one day gain in around a month. Iron ore prices are being supported by the strength in steel prices which has occurred in reaction to ongoing production restrictions in China. Expectations that restrictions in China’s top steel making city of Tangshan will be extended further are being held responsible for the mid-week rally.

forex iron

After surging to just shy of $70, iron ore prices fell back and are now fighting it out around $67 – $69 which is broadly the top of the range which was broken during the recent rally. If prices break back below this level properly, the deeper $63 level support will come into focus. Above the $70 level, the next key resistance level will be the $72 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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