Gold Price Bounces before Fed, Oil Price Rises on Stock Draw

2016-04-27 09:15:00 Nathalie Huynh, Contributor

Talking Points:

Gold prices rebounded after soft US data and as the market expects no change from FOMC
Oil prices held up above $44.4 as U.S. stockpiles were seen falling
Copper prices dipped alongside AUD although the downside was supported by soft USD

Copper prices dipped together with the Australian dollar after data pointed to the first quarter of deflation in the country in seven years. Nevertheless, prices halted declines after a two-day losing streak, thanks to a softer USD. Demand woes continued to pressure prices and copper may re-test a one-week low at $2.2265.

Gold prices rebounded to a three-day high of $1247.89 after a string of soft U.S. data ignited growth concerns and as a two-day Federal Reserve policy meeting started. U.S. durable goods orders, home price index, and consumer confidence were all lower than expected by the market. U.S. data have been rather mixed through the first quarter and this may reverberate recent calls for caution by Fed speakers. The more dovish the Fed may be, the more buying interests gold would attract.

Oil prices held up above $44.40 in Asian trade following overnight gains as the American Petroleum Institute reported an unexpected draw in US crude inventories last week. Stockpiles dropped by 1.1 million barrels versus an expected increase of 2.4 million barrels. WTI and Brent crude oil benchmarks each rose around 1 percent by the Asian afternoon. Upcoming data from the U.S. Department of Energy will likely be another market driver which could sway prices in either direction.

Oil prices have been trading choppy during April although they have not yet shown signs of a downward retracement as fundamental markets indicated.

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GOLD TECHNICAL ANALYSIS – Gold prices advanced for a third session although momentum signals remained lackluster. The upcoming Fed event may revive volatility and lead to sharp swings in gold prices such that they may come to test the boundaries of a medium-term range of 1207.6-1284.6.

Daily Chart - Created Using FXCM Marketscope

COPPER TECHNICAL ANALYSIS – Copper prices edged lower for a third straight session as downward momentum strengthened. Copper prices are focused on the downside for now, with a firm support level at 2.1485. A resistance level and 2016’s high at 2.3020 remains unchallenged.

Daily Chart - Created Using FXCM Marketscope

CRUDE OIL TECHNICAL ANALYSIS –Oil prices advanced close to a resistance level and 23.6% Fibonacci at $45.24. After a brief downside bias, momentum signals have turned flat as they approached the border with overbought territory. More sideway trading may emerge.