Talking Points:
- Gold prices eased from 5-week high on US dollar strength post-ECB meeting
- Oil prices fell as the market’s focus turned back to a failed output freeze deal
- Copper prices set for a weekly gain on the back of iron ore, although they were vulnerable to correction
WTI crude oil prices fell from a previous high at $44.49 to trade around $43.70 a barrel today as expectations waned on a prospective output freeze deal. Mixed headlines from Russia failed to restore the market’s confidence and Brent crude traded a narrow range of $44.75-45.23. The recent highs saw WTI oil increasing 57 percent from a multi-year low at $29.31 in January, and such steep gains may expose oil to profit taking activities.
Gold prices slipped from a five-week high at $1270.38 to trade around $1245 in the Asian afternoon as the dollar strengthened against the euro. The EUR/USD eased to a one-week low at 1.1270 on the prospects of additional easing measures from the ECB. Nevertheless, bullion was headed for a third weekly gain as investors continued to pour into haven assets given the recent tumult in equities and FX markets.
Copper prices dropped from a four-week high at $2.2890 in the previous session to trade in the $2.25s region although they still set for a strong weekly gain. Base metals including copper have ridden on a wave of iron ore price jumps. Today iron ore contracts quoted on Dalian exchange reached the highest level since September 2014 on a fifth straight session of gains. However these rapid advances may make metals susceptible to market correction in the near future.
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GOLD TECHNICAL ANALYSIS – Gold prices traded a narrow band at the middle of their 2-month range of 1207.6-1284.6. Momentum signals for bullion do not indicate high volatility ahead, thus gold may remain contained within these levels through to next week.
Daily Chart - Created Using FXCM Marketscope
COPPER TECHNICAL ANALYSIS – Copper prices eased today although they still set for a strong weekly gain. A resistance level at 2.3020 was holding firmly, as upward momentum waned. As such, strong boosts on the topside would be needed to bring copper up to challenge the resistance next week.
Daily Chart - Created Using FXCM Marketscope
CRUDE OIL TECHNICAL ANALYSIS –Oil prices halted their advance right ahead of the 23.6% Fibonacci(of a 2014-2016 decline) at $45.24. As commodities retraced downward, oil will likely hold out below this resistance level for the rest of this week. However an emerging upward momentum may lift oil prices to test resistance sometime next week.
Daily Chart - Created Using FXCM Marketscope
--- Written by Nathalie Huynh, Currency Strategist for DailyFX.com
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