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ICBC Trading Strategies of Precious Metals and Commodities Market - February 27, 2019
 

I. Precious Metal Market
Gold
Gold prices were held back on Tuesday by stronger-than-expected U.S. consumer confidence data, despite the Federal Reserve Chair Powell reiterated in testimony before the Senate Finance Committee that he would be “patient” while deciding to further raise interest rates. Spot gold kept stable at USD1,327.41 per ounce, while U.S. gold futures dropped down by about 0.1% to settle at USD1,328.50 per ounce. Gold prices continued to fluctuate above USD1,320, and yesterday’s stock market rally, as mentioned earlier, also supported gold prices. Currently, the suspension of the Fed’s monetary tightening has squeezed room for the USD rise, while the Sino-US trade negotiations and the stock market are the sources of gold hedging factors. Technically, the RSI index remained around 60, which was also in line with the support below the current gold price of USD1,320 on the whole. Although gold price was still expected to be bullish in the medium term, positive stock market, Sino-US trade negotiations and Kim-Trump Summit will attract more market attention. These factors may be favorable in the short term for the stock market and stimulate market risk appetite. Therefore, in the short term, it is expected that the upward space of the gold price is limited and it will continue to maintain the volatile trend.
Silver
On Tuesday, spot silver settled at USD15.88 per ounce after a fall of 0.1%. Silver prices almost remained unchanged yesterday, with short-term expectations still dominated by vibration and long-term bullishness. The support below 15.7 and 15.5 will be watched in the short term.

II. Commodities Market
Crude oil
Crude oil futures rose on Tuesday after news that the Organization of Petroleum Exporting Countries (OPEC) would maintain production cuts, ignoring U.S. President Trump’s criticism of OPEC’s move to boost oil prices last day. Oil prices fell more than 3.5% on Monday after Trump called for OPEC to relax its measures of boosting oil prices, representing the biggest one-day percentage drop in the year. An OPEC source told Reuters on Tuesday that despite Trump’s request for OPEC to relax its efforts in raising crude oil prices, OPEC and its allies will continue to implement agreements on cutting oil supplies and promote compliance by all parties. Brent crude oil futures rose USD0.45 to settle at USD65.21 a barrel yesterday. U.S. crude oil futures rose USD0.02 to settle at USD55.50 a barrel. On the other hand, the American Petroleum Association (API) said on Tuesday that U.S. crude oil stockpiles unexpectedly decreased last week, gasoline stockpiles fell and distillate stockpiles increased. API announced that U.S. crude oil stockpiles fell by 4.2 million barrels to 444.3 million barrels as of the week of February 22, while the analysts of Reuters Estimates expected an increase of 2.8 million barrels. Cushing crude oil stockpiles increased by 2 million barrels. The decline in U.S. crude oil stockpiles also supported oil prices. With the improvement of the implementation rate of OPEC production reduction in the future, the market focus will steadily shift to the implementation of OPEC production reduction. The crude oil market will continue to experience rebalancing, and it is expected that oil prices will still have potential to rise in the future.

Trading office, Beijing Branch
Qin Gang
February 27, 2019


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