Oil at Fresh Low amid Unabated Stocks, Gold Jumps to Rate Delay

Talking Points:

• Gold rallied after Fed Chair Yellen hinted at possible rate hike delay amid growth concerns
• Oil price saw no bottom yet, hit by Cushing build and Iranian oil
• Copper traded flat amid weaker USD

Oil price set on a free fall into the 26s area today as risk-selling persisted. After an initial recovery to unexpected crude draw reported by U.S. Department of Energy, a similarly unexpected build in Cushing reminded the market of a global glut. News of Iran offering lower price than Saudi’s oil reinstated this outlook. A full recovery in risk sentiment is needed before oil could pick up from more fresh lows.

Gold price rallied near the highest since February 2015 at 1232 as Fed Chair Yellen hinted at possible delay of US interest rate hikes this year. Previously expected to deliver four hikes including one in March, the Fed now shifted to wait-and-see mode after recent market turbulence and slow US employment growth. Likewise, JPY also rallied through today while Nikkei and regional stocks slid further. The extent of gold’s advance depends on whether this risk rout will carry on until the weekend.

Copper price traded flat after 4 straight days of sharp declines as the USD weakened among G10 currencies and Chinese yuan. Extremely thin market with the absence of China kept copper in a choppy yet directionless manner. However growth concerns in the US and globally as outlined by Yellen will likely limit upside potential.

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GOLD TECHNICAL ANALYSIS – Gold advanced near the top of a consolidation in first-half of 2015, also the highest since last February. It is unclear whether it will break through this level, given flat momentum signals in overbought territory. One thing for sure is the strong momentum will keep gold elevated for a while.

Daily Chart - Created Using FXCM Marketscope

COPPER TECHNICAL ANALYSIS – Copper price held out above the 2.0020 support level on a second day, an indication that it may sustain these levels until this weekend. Inherent downward pressure remains, hence traders should be prepared for lower moves in near future.

Daily Chart - Created Using FXCM Marketscope

CRUDE OIL TECHNICAL ANALYSIS – WTI oil broke through a multi-year low in the 27s to tackle fresh lows in the 26s area. There is no stopping to the oil slide in near term with strong downward momentum. Next support is 25.80, the lowest since 2003.

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