Talking Points:
- Gold prices pared losses following a rally in silver prices
- Oil prices surged to 2016’s high on falling US output and news of more OPEC meetings to stem production
- Copper prices rallied along with oil and equities
WTI oil prices reached up to $44.41in Asian trade, the highest level since December 7, leading to a swift recovery in Asian equities and commodities. Official weekly data from the U.S. Department of Energy showed a fall in crude oil output even as inventories rose in line with consensus of 2.08 million barrels. The data coupled with latest news of potential OPEC meetings in May to stem production led to steep gains in oil prices. The Head of the International Energy Agency (IEA) Birol said today that he expected the oil market to restore balance from an oversupply by next year, baring any economic shocks.
Copper prices rallied to the highest in nearly a month following strong gains in oil and equities. The metal reached up to $2.2710 while steel continued a multi-week rally and spot iron ore rose for a third straight day. The growing risk appetite will likelysupport most commodity markets in the short term. However the topside of copper may be contained by a supply influx. The International Copper Study Group (ICSG) reported a 56,000-tonne surplus in January, compared with a 50,000-tonne deficit in December.
Gold prices pared earlier lossesto trade near the previous session’s high after silver rallied to the highest level since May 2015, even as the dollar held gains. The greenback hit a two-week high against the safe-havenyen and Swiss franc, while the euro slipped ahead of today’s European Central Bank meeting. The meeting is notexpected to deliver any policy change, although bullion traders will be watching it closely for any impact on the dollar and subsequently on gold.
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GOLD TECHNICAL ANALYSIS – Gold prices rose to a new one-week high of $1260.35 following steep gains in silver. Prices have edged up toward a monthly high of $1262.79 where moderate resistance is expected. Nevertheless, gold remained well contained within the 1207.6-1284.6 range. Range traders may find some opportunities given the heightened volatility.
Daily Chart - Created Using FXCM Marketscope
COPPER TECHNICAL ANALYSIS – Copper prices continued a rally toward the 2016’s high at 2.3020. Prices may face considerable resistance once they enter the area populated with past daily highs, between 2.2815 and the 2016’s high. The upside bias remains strong.
Daily Chart - Created Using FXCM Marketscope
CRUDE OIL TECHNICAL ANALYSIS – On a weekly chart, oil prices were approaching $45.24 resistance level, 23.6% Fibonacci of the 2014-2016 decline. A week of strong gains have built up upward momentum, although it is unclear whether the momentum could help oil to break through this firm resistance.
Weekly Chart - Created Using FXCM Marketscope
--- Written by Nathalie Huynh, Currency Strategist for DailyFX.com
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