Talking Points:
- Gold pricessank to one-week low on broad USD and risk recovery
- Oil pricestopped out as both WTI and Brent showed signs to slow down
- Copper prices remained supported amid encouraging data from China
The dollar was broadly firmer on Thursday after posting itsbiggest one-day gain in more than a month due to an improvement in global sentiment. This renewed strength in the greenback pressured prices of commodities and risk currencies.
Meanwhile in Asia, the Monetary Authority of Singapore (MAS) today abandoned its preference for a strong SGD, a move equivalent to an easing bias given Singapore does not control its interest rates. The market was quick to sell regional currencies whereas the recent China-inspired stock rally accelerated.
Gold prices plunged to a one-week low of $1229.20 in response to a broad recovery in USD and risk assets following firm China’s trade data. Before this retreat, bullion topped out right below a one-month high of $1262.79, making it a strong resistance level going forward. Safe haven assets like JPY also slipped for a third day except for G10 bonds.
WTI oil prices slipped today after topping out below a 3-month high of $42.29. Brent oil prices also retreated after establishing a fresh 2016’s high of $44.94. Front-month Brent crude futures are trading at a premium over forward prices due to a temporary supply constraint. Nonetheless, both WTI and Brent oil benchmarks show signs to slow down after a two-week rally, as the market take profit ahead of a producers meeting this Sunday.
Copper prices also eased from a two-week high of $2.1800 today. Prices remained supported on the back of this week's better-than-expected Chinese trade data, which raised hopes that the economy may have stabilised. An unexpected fall in U.S. March retail sales overnight has cooled this sentiment a little.
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GOLD TECHNICAL ANALYSIS – Gold prices declined on a third day and hit a weekly low of $1229.20 as momentum strengthened on the downside. Looking ahead, a support level at 1207.6 may help to scale down the declines.
Daily Chart - Created Using FXCM Marketscope
COPPER TECHNICAL ANALYSIS – Copper prices held up above a technical level at 2.1485 which has been acting as a support level lately. Strong upward momentum indicates that this support may hold firmly despite today’s losses. There is no apparent resistance level on the upside from here toward the 2016’s high of 2.3020.
Daily Chart - Created Using FXCM Marketscope
CRUDE OIL TECHNICAL ANALYSIS – Oil prices topped out below a 3-month high of $42.49 and a long-term resistance level at $43.43. The recent declines and waning momentum both hint at the possibility of a downward reversal. Investors should tread with caution.
Daily Chart - Created Using FXCM Marketscope
--- Written by Nathalie Huynh, Currency Strategist for DailyFX.com
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