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ICBC Trading Strategies of Precious Metals and Commodities Market - October 16, 2018
 

I. Precious Metals
Gold

Gold rose to its highest level in 2-1/2 months on Monday as a slide in global stock markets, exacerbated by mounting tensions between Western powers and Saudi Arabia, forced investors to find safety and unwind some bearish bets in the metal.

Spot gold gained 0.7 percent to $1,226.50 per ounce, having earlier climbed more than 1 percent to touch a peak of $1,233.26, the highest since July 26. U.S. gold futures settled up $8.3, or 0.68 percent, at $1,230.3.

Holdings of SPDR Gold, the largest gold-backed ETF, rose nearly 2 percent last week. That was the biggest weekly inflow since January, following declines of more than 4 million ounces since hitting a peak in late April.

On the technical front, gold poked above the 100-day moving average at around $1,227 and a close above it could provide additional support, analysts said.

Silver

Silver gained about 1 percent to $14.69, crossing over the key resistance of the 50-day moving average. The weekly K-chart also rose above the 10-week moving average, forming a golden cross with the 5-week moving average, suggesting a new wave of rally in the medium term.

II. Commodities
Crude Oil

Oil prices steadied on Monday, supported by geopolitical tension over the disappearance of a Saudi journalist that has stoked worries about supplies from Riyadh, but weighed by concern over long-term demand outlook.

Brent crude futures for December delivery rose 35 cents to settle at $80.78 a barrel. U.S. West Texas Intermediate (WTI) crude futures rose 44 cents to settle at $71.78 a barrel. Last week, both contracts fell by more than 4 percent as U.S. stock markets tumbled. However, rising geopolitical tension between the United States, the world's top oil consumer, and Saudi Arabia, one of the biggest crude producers, supported prices on Monday.

Riyadh has been under pressure since journalist Jamal Khashoggi, a critic of the kingdom and a U.S. resident, disappeared on Oct. 2 after visiting the Saudi consulate in Istanbul. U.S. President Donald Trump has threatened "severe punishment" if it is found that Khashoggi was killed in the consulate.

Saudi Arabia said it would retaliate for any action against it over the Khashoggi case, state news agency SPA reported on Sunday, quoting an official source. This comes at a critical time for global oil markets, which are bracing for U.S. sanctions against Iran due to come into force on Nov. 4.

The United States is still aiming to cut Iran's oil sales to zero, Washington's special envoy for Iran said on Monday. If the Saudis don't come to the rescue when the Iranian sanctions kick in, it's going to be a very undersupplied market, which is expected to drive prices higher.

Copper

China's unwrought copper imports surged to their highest in 2-1/2 years in September, while copper concentrate imports climbed to an all-time high as the world's top copper consumer's crackdown on scrap leaves it needing other forms of the metal.

LME copper stocks have dropped since August as ShFE stocks have climbed, reflecting higher imports to the world's top metals consumer after a crackdown on waste imports that cut the availability of scrap metal. Copper ended mostly unchanged at $6,301 per tonne.

Technically, copper is expected to keep trading within the wide range of the 50-day moving average of $6,105 and the 100-day moving average of $6,354.

Soybean

U.S. soybean futures jumped to a two-month high on Monday on concerns over poor harvest in the U.S., and short-covering triggered by newest signs of export and home demand.

Chicago Board of Trade November soybean futures settled up 24 cents at $8.91-1/2 per bushel after reaching just off the session top of $8.92, the contract's highest since Aug. 21. November contracts poked above the 100-day moving average of 8.89 cents.

December soymeal rose $10.10 to $327 per short ton. December soyoil gained 0.37 cents to 29.76 per pound.

Dealing Room, ICBC Beijing Branch
                        Huang Han


(2018-10-16)
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