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Gold Gains as ECB Cut Rate; Oil Trades Choppy to OPEC Headlines

Gold Gains as ECB Cut Rate; Oil Trades Choppy to OPEC Headlines

Nathalie Huynh,

Talking Points:

  • Oil buying interests build in anticipation of OPEC’s resolution for glut
  • Copper recovers on weak USD, awaiting NFP today and China trade data next week
  • Gold sets for first weekly gain after ECB’s deposit rate cut

Oil price traded below 41.50 with a slight upside bias as USD weakness was countered by oil volatility due to conflicting reports on OPEC output cuts. The group will meet today in Vienna to decide on output policy, inclusion of former member Indonesia, and leeway for additional Iranian oil. Brent oil also display an upward bias. The impact of downside surprise to oil price will be huge if OPEC eventually decides not to cut production.

Gold price stabilized below 1064.55, heading for the first weekly gain since October after the European Central Bank cut deposit rate by 10 basis points to -0.3% (negative rate). The biggest driver for gold this week is perhaps U.S. Non-farm Payrolls data today. After 271K jobs in October, the forecast for November is 200K jobs gain.

Gold will likely react in reverse of how this data comes out in comparison to forecasted, as it is a primary indicator to a US rate hike.

Copper pricealso benefited from the USD decline and recovered up to a resistance at 2.0650. Metals largely ignored an equity rout in Asia today to focus on direction of the dollar. As such, market driver for metals until the end of this week will be Non-farm Payrolls and subsequent market reaction in the USD. Next week will start with one of the most important Chinese data: trade balance, exports, imports, which will undoubtedly make a big impact on metal prices.

GOLD TECHNICAL ANALYSIS – Similar to other commodities, gold price halted ahead of a 6-year low and support level at 1044.73 in yesterday’s session. Muted price action dominates the market coming up to a U.S. major data with potential for more downward pressure on gold. 20-day moving average at 1073.5 continues to cap the topside.

Gold Gains as ECB Cut Rate; Oil Trades Choppy to OPEC Headlines

Daily chart - Created Using FXCM Marketscope

COPPER TECHNICAL ANALYSIS – Copper continued to trade the range between multi-year low at 2.0020 and 20-day moving average at 2.098. There is no sign for a change of momentum nor a breach out of range at moment. High volatility will emerge before and after event risk today, where short-term traders could lock in small profit.

Gold Gains as ECB Cut Rate; Oil Trades Choppy to OPEC Headlines

DailyChart - Created Using FXCM Marketscope

CRUDE OIL TECHNICAL ANALYSIS The recent halt of WTI oil price confirmed the resilience of long-term support at 40.07. Oil remains range-bound with an imminent upside bias as seen in momentum signals. These movements provide some opportunities to range traders, although they should be mindful of extreme volatility around the OPEC meeting.

Gold Gains as ECB Cut Rate; Oil Trades Choppy to OPEC Headlines

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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