Talking Points:

  • Gold sustained upward progression amid volatile swings in market
  • Oil held out on the back of falling gasoline and distillate stockpiles
  • Copper retained gains as expectation built ahead of G20 summit in Shanghai

Prior to a G20 summit in Shanghai on February 26-27, there is no shortage of Fedspeak and macro policy provisions. A white paper by China central bank PBoC recommended raising fiscal deficit to 4% of GDP to offset falling revenue due to tax cuts (a stimulus). The International Monetary Fund voiced a preference for dovish consideration by China and US Federal Reserve.

Federal Reserve Bank of St. Louis President - James Bullard – stated that the recent fall in inflation expectation and higher market volatility may contribute to more gradual pace of rate hike. As outlined in past articles, dovish talks and market uncertainty will no doubt attract capital flows into safe havens thus sustain gold gains.

Within 2 days, oil price slashed 8.8 percent from 33.53 down to 30.56, only to regain 6 percent back up to 32.40. Extreme volatility continues to dominate oil market, instead of directional moves. As such, price action remains sensitive to every political or supply news. The latest of which is U.S. Department of Energy’s inventory report, in which a 3.5 million barrels crude build was countered by draws in both gasoline and distillate stockpile.

Copper price held up on a fourth day of gains, leveraging on news of potential added stimulus in China, even as Shanghai Composite lost 3.5 percent. Downside extensions loom as copper side-tracked from a recent 2-week high at 2.1325. Metal investors will closely follow this week’s G20 meeting – centred on China slowdown and world growth – for cues of upcoming economic stimulation.

Need a hand to start trading: Free Guides

Want to read market’s momentum: Speculative Sentiment Index

GOLD TECHNICAL ANALYSIS Gold price traded sideways for another day with no intention to retrace support trend line nor yearly high at 1308. Given flat momentum signal, investors may utilise this quiet period to adjust positions and consider strategy following G20 summit. Any positive signal from this meeting will likely trigger downside extensions in gold.

Copper, Gold Hold before G20; Oil Firms as Gasoline Stock Drops

Daily Chart - Created Using FXCM Marketscope

COPPER TECHNICAL ANALYSIS – Copper price steadied in the 2.0940-2.1150 range as the recent rise halted amid stock losses and oil’s fluctuation. Macro developments at the G20 meeting will no doubt provide directional hints. Traders may stay put for now.

Copper, Gold Hold before G20; Oil Firms as Gasoline Stock Drops

Daily Chart - Created Using FXCM Marketscope

CRUDE OIL TECHNICAL ANALYSIS Oil price remained within range with rather flat momentum signals. Choppy trading will likely persist tomorrow, if not next week. There is no concrete threat to either boundary, however no range trade opportunity either.

Copper, Gold Hold before G20; Oil Firms as Gasoline Stock Drops

Daily Chart - Created Using FXCM Marketscope

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

Losing Money Trading Forex? This Might Be Why.

Contact and follow Nathalie on Twitter: @nathuynh