Gold prices were softer this week, but only just, managing to rally up off initial lows on the week as the US Dollar traded lower. The weakness in USD came in response to a report that President Trump told the Wall Street Journal he is considering taking trade action against Japan. The US is already heavily engaged in a trade war with China, with the market braced for a further round of tariffs to the tune of $200 billion, and the prospect of taking on another major trading power seemingly has investors concerned.
The market is still waiting on the outcome of NAFTA renegotiation talks with Canada potentially set to agree a new tri-country deal with the US and Mexico which should alleviate some investor concern. However, the situation with China remains the focus point and Beijing has promised to retaliate if the US presses ahead with its planned $200 billion tariffs.
After breaking down through the July 2017 low at 1205.29, gold is now retesting that broken support level which is holding as resistance. If the price falls back from here, the 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.
Silver prices collapsed this week trading down to levels not seen since 2016 as the prospect of yet a further escalation in global trade disputes weighed on the metal. Although silver is a precious metal it also has many industrial uses and often trades in tandem with US industrial sentiment. The fall back in US equities this week, which traded back below the 2018 high on global trade fears.
The cascade in silver prices over the last few months has been relentless with silver posting just one positive week in the last thirteen. Price has now fallen right back down to test the 2017 low of 14.1103 having briefly pierced below the level midweek to trade levels not seen since 2016. While some technical support is likely here, the focus remains on further downside in the near future.
The red metal softened again this week following a minor recovery over the prior week as growing global trade fears outweighed a weaker US Dollar to fuel net-selling on the week. While positive economic data in Europe has been a boost for copper trading sentiment, the prospect of a fresh round of US tariffs on Chinese goods has the market worried about future demand for copper as Chinese manufacturing drops.
Copper 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.
Once again this week, iron ore bucked the trend and traded into the higher ground despite the widespread losses registered across the broader metals complex and commodities complex as a whole. The rally is reportedly being linked to resurgent Chinese steel markets which have been trading strongly following news that Chinese officials have extended production limits in the city of Tangshan, which is China’s top steel making city.
After falling back over the last few weeks iron ore is now turning north once again and is making a fresh attempt to break above the now fabled $68 – $69 region and return to highs. If price can breach the $70 we should see momentum players join the fray to take prices higher still with $72 the next key resistance.