Talking Points:

  • Gold saw inflows as investors took cover before major market events: NFP, ECB, BOJ, FOMC
  • Oil edged up as falling output overshadowed huge stock build
  • Copper continued rally alongside stocks and risk assets

WTI oil price finds a reprieve in falling US output and potential shortage of storage capacity into refinery maintenance season. Output fell for the sixth week and to the lowest level since November 2014 of 9.08 million barrels a day. Overall, market still waits to see if oil could rally back to $35 level.

On the other hand, long term pressure was reinstated by unexpected huge crude build in the US last week, also reported by Department of Energy. 10.37 million barrels were added nationally with 1.19 million barrels at Cushing hub alone. Contrasting to last week’s deep dip that triggered a price rally, gasoline inventories added around 1.14 million barrels.

Gold price continued to garner inflows as investors placed cautious hedge before major market events this month. Non-farm Payrolls starts the trail this Friday, followed by central banks meeting by the ECB, Bank of Japan, and US’s FOMC. While market debates whether a US hike or EU rate cut would materialise, safe havens like gold or JPY remain popular to preserve capital through period of high volatily.

Copper price touched up to 2.20 level, last seen in November 2015, along with a rally in stock after positive US jobs data. payrolls report from ADP Research Institute revived talk of the Federal Reserve’s rate hike, following Tuesday’sdata that manufacturing was steadying.

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GOLD TECHNICAL ANALYSIS – Gold price shows no sign to break out of consolidation, with occasional topside extensions. All other signals point to further stagnation hence long term investors may keep positions as planned. Low volatility is expected in the near term.

Copper, Oil Price Join Risk-On, Gold Attracts Flows before Events

Daily Chart - Created Using FXCM Marketscope

COPPER TECHNICAL ANALYSIS – Copper price rallied on a second day as investors await a clean break above trend line support. Given wide trading band in last two sessions, it is uncertain whether these new gains are sustainable. Tight stops should be exercised on the downside.

Copper, Oil Price Join Risk-On, Gold Attracts Flows before Events

Daily Chart - Created Using FXCM Marketscope

CRUDE OIL TECHNICAL ANALYSIS Oil price broke through previous resistance level at 34.25 with today’s prices promising a clean break. If so that would be a good sign to long investors, and a signal to conclude range trades. Next resistance at 38.36 is safe for now.

Copper, Oil Price Join Risk-On, Gold Attracts Flows before Events

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