Commodities Weekly: Gold pressured by risk bulls

 

The brisk turnaround in danger urge for food final week, fueled by encouraging financial knowledge and comparatively sturdy Q1 earnings studies, has seen valuable metals underneath strain, whereas agricultural and power commodities had been blended.

 

Valuable metals

GOLD may very well be on monitor to shut under the 100-day shifting common at 1,288.47 right now for the primary time since November 15. The steel touched the bottom since April four yesterday and is testing trendline assist across the 1,285 stage.

 

Gold Every day Chart

Supply: OANDA fxTrade

 

Speculative accounts added to internet lengthy place within the week to April 9, the most recent knowledge from CFTC exhibits. Gold held by exchange-traded-funds is at present up 1.2% from a yr earlier, in response to Bloomberg calculations.

 

SILVER hit the bottom since December 26 yesterday, however rebound to shut within the black and is at present pivoting across the 200-day shifting common at 15.007. The gold/silver (Mint) ratio superior for a 3rd consecutive week final week, however seems poised to interrupt that cycle this week. It’s now at 85.896.

Speculative traders lowered internet lengthy positions to the bottom for the reason that week of December 11 within the week to April 9, the most recent knowledge snapshot from CFTC exhibits.

 

PLATINUM seems set to fall for a fourth straight session right now, echoing the weak point in different valuable metals. Platinum touched the best since end-Might early final week, however failed to keep up upward momentum and closed decrease on the week. The steel may discover some assist as fears heighten that South African manufacturing may very well be disrupted because it faces a interval of robust wage negotiations at its mines.

Speculative traders nonetheless stay bullish on the commodity nevertheless, rising internet lengthy positions to the best in additional than 13 months.

 

PALLADIUM continues to float sideways after the steep fall from above 1,600 late final month. The steel has opened under the 100-day shifting common for the second day in a row and is hovering above 11-day lows. The shortcoming to carry the important thing 1,600 stage has seen extra speculative bulls bale out of speculative lengthy positions, with traders lowering internet longs for a seventh straight week to April 9. Web lengthy positioning is now at its lowest for the reason that week of September 18, in response to the most recent CFTC knowledge.

 

Base metals

Experiences of progress within the US-China commerce negotiations continues to assist COPPER costs, although with no confirmed deal the commercial steel seems to lack the facility to interrupt above the psychological three.00 stage. Costs have traded under this mark since June 25. The extent can also be near the 61.eight% Fibonacci retracement stage of the June-January drop at three.0026. A stronger-than-expected China Q1 progress quantity, which is due for launch tomorrow, may very well be the catalyst to propel costs via this key stage.

China’s imports of copper focus hit report ranges in Q1. Imports hit 5.6 million tons amid a rise in home smelting capability.

 

Copper Every day Chart

Supply: OANDA fxTrade

 

Vitality

CRUDE OIL stays supported by provide considerations, notably surrounding Libya, however appears to be missing upward momentum and may very well be going through the primary down-week in seven weeks this week. West Texas Intermediate has failed to keep up a foothold above a key Fibonacci stage at 63.894 (61.eight% retracement of the October-December decline) and is now at 63.257.

Knowledge launched Friday confirmed a rise in US oil rig drilling exercise for a second straight week, which may assist bridge the shortfall from OPEC cuts. In the meantime in a report launched Friday, IEA’s govt director mentioned that oil costs above $70 per barrel (Brent crude) is appearing as a drag on world demand. Within the report, the IEA maintained its forecast for world demand for this yr at 1.four million barrels per day, however it may face a downward revision if oil costs stay excessive. Brent crude is buying and selling at 71.280.

Speculative traders stay bullish on oil although, including to internet lengthy positions for an eighth straight week within the week to April 9, CFTC knowledge exhibits. Web lengthy futures positions are actually on the highest for the reason that week of October 9.

 

NATURAL GAS failed to realize any upward traction amid colder climate, so now hotter spell is forecast for the US east coast, the draw back would look like extra weak. Fuel costs are at two-month lows and danger breaking via the February low at 2.57, which in flip was the bottom since December 2017.

The shortage of upward momentum was an encouragement to Pure Fuel bears, who added to internet brief positions for the primary time in three weeks to April 9, CFTC knowledge exhibits, and they’re now on the highest in additional than a month.

 

Agriculturals

SOYBEAN costs are exhibiting indicators of rebounding from final week’s losses however nonetheless have to rise above the 55-week shifting common at 9.0079. This shifting common has capped costs since June, and a sustained break above would convey the 100-week shifting common at 9.3357 into focus.

 

Soybeans Weekly Chart

Supply: OANDA fxTrade

 

Hopes for progress within the US-China commerce talks, and therefore a rise in Chinese language purchases, are serving to to assist costs, although with no confirmed deal the traction may very well be fleeting. The most recent improvement within the talks is that either side are anticipated to determine “enforcement places of work” to make sure compliance, in response to US commerce secretary Mnuchin.

The rebound from this yr’s low over the previous few weeks has seen speculative traders scaling again their internet brief positions. Buyers trimmed shorts for the third week in 4 within the week to April 9.

 

CORN may face some provide points as heavy rains are forecast throughout the US South and Midwest, which may delay seed planting and affect harvests. Costs touched close to two-week highs yesterday and are nonetheless trying to get well the heavy losses suffered on the final buying and selling day of March. The 200-day shifting common at three.5909 seems to be the primary hurdle that must be overcome. Regardless of the rebound, speculative traders are most bearish on corn since October 2013.

 

WHEAT costs have been range-bound over the previous week even amid studies that storms hitting the Central US space may doubtlessly injury crops and delaying contemporary planting. Speculative traders are turning much less bearish, lowering internet brief positions for a fifth straight week, to the bottom for the reason that week of February 29. That’s in response to the most recent CFTC knowledge as at April 9.

 

It has been one other tight-ranged week for SUGAR costs, which haven’t been in a position to get away of the Zero.1232-Zero.1292 parameters which have contained exercise for the previous month. There haven’t been many updates on crops outlooks or harvesting totals aside from out of Brazil, the place beneficial climate is making a extra constructive outlook for harvests. Sugar bears are shedding endurance and scaled again internet brief positions for a fourth straight week to the bottom since February 26.

 

 

This text is for common info functions solely. It isn’t funding recommendation or an answer to purchase or promote securities. Opinions are the authors; not essentially that of OANDA Company or any of its associates, subsidiaries, officers or administrators. Leveraged buying and selling is excessive danger and never appropriate for all. You may lose your entire deposited funds.

A seasoned skilled with greater than 30 years’ expertise in overseas trade, rates of interest and commodities, Andrew Robinson is a senior market analyst with OANDA, liable for offering well timed and related market commentary and reside market evaluation all through the Asia-Pacific area. Having beforehand labored in Europe, since shifting to Singapore he labored with a number of main establishments together with Bloomberg, Saxo Capital Markets and Informa International Markets, proving FX methods primarily based on a mixture of technical and basic evaluation in addition to market stream info. Andrew started his profession as an FX seller with NatWest and the Royal Financial institution of Scotland within the UK.

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