Gold Price Slips on Solid US Data, Oil Inventory at Record High

2016-03-31 06:40:00

Nathalie Huynh, Contributor

Talking Points:

Gold price hit one-month low after signs of renewed strength in U.S. labor market
Oil price fell below $38 as crude inventories remained at a record high
Copper price fell for a fifth day as market expected another weak China Manufacturing PMI

Oil prices fell below $38 in Asian trade on Thursday, hitting the lowest level in more than two weeksamid recurring worries of global oversupply. U.S. Department of Energy reported that crude inventories rose to a record high on the seventh week. Crude stockpiles rose by 2.3 million barrels to 534.8 million barrels in the week to March 25. This weekly increase came despite an 11-year highrefinery utilisation rate, although it fell short of analysts’ expectation.

Gold prices hit a one-month low of $1208.38 as signs of renewed strength in U.S. labour market and a rally in equities curbed demand for haven assets. After a strong ADP print of 200,000 versus the 195,000 expected, the Non-farm Payrolls data on Friday is expected to show another strong jobs figure. A gold rally after Fed Chair Yellen’s comments seems to have run its course, and any good economic data in the future may dampen prices.

Copper prices fell for a fifth day and recorded the longest losing streak since January as the market expected another soft China Manufacturing Purchasing Managers' Index on Friday. The country’s official PMI and Caixin/Markit PMI will be released in the Asian morning. Other metals also traded lower. Market analysts forecasted that China's factory gauge likely shrank for an eight straight month in March.

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GOLD TECHNICAL ANALYSIS – Gold prices traded subdued above the two support levels at 1207.6 and 1191. The precious metal may continue trading sideways given the absence of any directional signal. Gold seems to have topped out at the one-year high of 1284.64.

Daily Chart - Created Using FXCM Marketscope

COPPER TECHNICAL ANALYSIS – Copper prices fell for a fifth day and recorded the longest losing streak since January. Copper is trading close to a support level at 2.1485. Momentum signals indicate that further declines are possible in the near future.

Daily Chart - Created Using FXCM Marketscope

CRUDE OIL TECHNICAL ANALYSIS – Oil prices fell below the $38 mark today and re-entered the 34.79-38.99 range in early March. Similar to other commodities, oil prices are under downward pressure. The lower bound of range also acts as an immediate support level at 34.79.