Gold Price Drops before Fed Meeting, Oil Slips as Iran Defies Cut

2016-03-15 06:40:00

Nathalie Huynh, Contributor

Talking Points:

Gold price slipped before US FOMC meeting this week
Oil price retreated after Iran held a firm stance on no output freeze
Copper price pared gains amid weak demand and supply glut in China

US dollar strengthened before U.S. Federal Reserve meeting this week, sending gold priceand most of G10 currencies lower today. Gold touched down on a support trend line, whose break would spell trouble to the January-March climb. The downside of gold will continue to be tested up to the event’s outcome.

Commodity price slump weighed on mining shares and that in turn dampened metal prices. Last week’s rally in copper price did not last long given weak market fundamentals. Physical demand in China remains weak while copper inventories monitored by the Shanghai Futures Exchange hit a record high recently.

Oil priceretreated for the first time in a week, likely due to profit-taking at the peak of the rally, Iran’s refusal to contain output, and OPEC growth revision. Iran reiterated its intention to boost daily production to 4 million barrels, casting more doubt on afragile output freeze accord. OPEC downgraded GDP forecast to 3.1% from 3.4% amid pressured oil prices.

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GOLD TECHNICAL ANALYSIS – Gold price parked on the support trend line today as downward pressure intensified ahead of major event risk this week. An uptrend signal in moving averages also dissolved. Traders should be mindful and prepared for a breach of support level.

Daily Chart - Created Using FXCM Marketscope

COPPER TECHNICAL ANALYSIS – Copper price dipped below a support trend line today as the consolidation prevails over the upward progression. Mixed momentum signals and recent price action indicate this situation likely prolongs.

Daily Chart - Created Using FXCM Marketscope

CRUDE OIL TECHNICAL ANALYSIS – Oil price returned within a range of 34.25-38.36 that had held before a brief break during last week’s rally. The inherent downward momentum hints at lower moves ahead.