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Gold Holds up Amid USD Unwinding while Copper Sinks on Low U.S. ISM

Gold Holds up Amid USD Unwinding while Copper Sinks on Low U.S. ISM

Nathalie Huynh,

Talking Points:

  • Oil is pressured by unexpected crude stock build reported by API, awaiting DoE’s data
  • Copper hovers on support level, as Chinese stock gains counter a huge drop in U.S. ISM index
  • Gold holds on to gains amid USD unwinding before event risk this week

Gold price held up above 1064.5 support level thank to broad USD weakness due to position adjustments. Traders have been unwinding USD longs, ahead of event risk this week: the European Central Bank policy meeting tomorrow December 3, and U.S. Non-farm Payrolls on Friday.

However the downside of gold price remains vulnerable to macro shocks, be that data or market action, as NFP approaches and so does the Federal Reserve’s meeting on December 16.

Copper price nearly paredall gains of the last two sessions after U.S. Institute for Supply Management’smanufacturing index dropped to the lowest since 2009. Copper hovers above 2.0650 intraday support level with modest support from today’s Chinese stock gains. The Shanghai Composite closed today’s trading up 2.33 percent. Prior to the US data, metals made a comeback following decent Chinese PMIs and commodity recovery.

Oil price remained under pressure after report of unexpected stock build from the industry-group American Petroleum Institute in the Asian morning. Total crude inventories rose by 1.6 million barrels during the week ended today, while Cushing build reached 453,000 barrels. These figures prelude potential upside surprise in official inventory data published by the U.S. Department of Energy tomorrow.

An intraday support level to oil price comes at 41.50, followed by a 3-month support level at 41.21.

Note: OPEC semi-annual meeting kicks off on December 4 in Vienna.

GOLD TECHNICAL ANALYSIS – 20-day moving average at 1077.7 continues to cap the topside of gold price. Upward momentum is inherent and a test of this resistance is possible, except for a change of direction due to event risk. A firm resistance comes above that at 1098.8, limiting higher price extensions. Range trades prevail given current conditions.

Gold Holds up Amid USD Unwinding while Copper Sinks on Low U.S. ISM

Daily chart - Created Using FXCM Marketscope

COPPER TECHNICAL ANALYSIS – Not much has changed in copper price as the metal continued choppy trading between a multi-year low at 2.0020 and the 20-day moving average at 2.1118. Downward momentum signals indicate lower moves to come. The bears could keep their stops trailing the MA or adjust target near this firm support level.

Gold Holds up Amid USD Unwinding while Copper Sinks on Low U.S. ISM

DailyChart - Created Using FXCM Marketscope

CRUDE OIL TECHNICAL ANALYSIS WTI oil price is on a 4th day of declines as part of an apparent reversal from its recent top at 43.46. The bears should be mindful of 40.07 support level ahead, especially as downward momentum signals are near exhaustion. Like gold, rage trades dominate oil prices at present.

Gold Holds up Amid USD Unwinding while Copper Sinks on Low U.S. ISM

Daily Chart - Created Using FXCM Marketscope

--- Written by Nathalie Huynh, Currency Strategist for DailyFX.com

Contact and follow Nathalie on Twitter: @nathuynh

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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