Talking Points:

  • Gold advanced after Chinese PMI and mixed US/Eurozone data prompted economic concerns
  • Oil weakened as OPEC production cuts seemed farfetched
  • Copper consistently traded sideways amid lower volume prior to Lunar New Year

Gold price advanced to the highest since November 2015 amid selling in equities and other commodities following an 11th consecutive month of Caixin Chinese PMI in contraction zone. Mixed economic data from the US, UK and Eurozone further enhanced investors’ interests to preserve capital through gold. Bullion consistently stayed above its support trend line, a hint of further upside development.

Oil price slumped again as it became clear that there might not be a coordinated OPEC production cut. Coming up are weekly inventory reports by the American Petroleum Institute and U.S. Department of Energy’s EIA, both are predicted to show a persistent crude stock build.

Early signs of a sentiment change emerged in data by U.S. Commodity Futures Trading Commission that money managers increased long positions in both oil and gold for the week ended January 26.

Copper price traded sideways under 2.0750 on a fifth day. This might be good news to the bulls as prices withstood the latest oil slip, stagnant Chinese factory gauge, and trade slowdown before Lunar New Year. Data by Chinese customs showing record high refined copper imports last week helped to provide more support. However there is little chance for further upside extensions until copper passes this first resistance.

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GOLD TECHNICAL ANALYSIS – Gold price sustained gains above 1113 support level and support trend line. Topside bias remains present as long as this trend line holds, although momentum may not build up at this close to Lunar New Year.

Gold Rises after Insipid Economic Data; OPEC Output Cuts Unlikely

Daily Chart - Created Using FXCM Marketscope

COPPER TECHNICAL ANALYSIS – Copper traded flat near the middle of 2.0020-2.1485 range as momentum wanes on the upside. No hint of a new direction has emerged. Copper bulls should keep a close watch of support level, followed by multi-year low at 1.9355.

Gold Rises after Insipid Economic Data; OPEC Output Cuts Unlikely

Daily Chart - Created Using FXCM Marketscope

CRUDE OIL TECHNICAL ANALYSIS WTI oil price reversed to the lower area of 34.25 resistance and touched down on 20-day moving average at 31.13. A downward reversal of momentum signals indicate apparent hindrance to the recent oil recovery. Range trade continues within the bounds.

Gold Rises after Insipid Economic Data; OPEC Output Cuts Unlikely

Daily Chart - Created Using FXCM Marketscope

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

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Contact and follow Nathalie on Twitter: @nathuynh