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ICBC Trading Strategies of Precious Metals and Commodities Market - October 30, 2018
 

Gold

Gold eased on Monday, sliding off a more than three-month peak in the previous session, pressured by a strong dollar and as investors returned to riskier assets following a recent sell-off in global stocks. Spot gold was down 0.6 percent at $1,225.71 per ounce. U.S. gold futures settled down $8.20, or 0.7 percent, at $1,227.60.

With the dollar strength, it is hard for gold to see any rally. After rising to the highest within the year, the dollar index is very likely to poke over the key mark of 97. Prospects for higher U.S. interest rates also made investors more cautious in holding the non-interest-bearing bullion. Despite the volatility we have seen in equities (on Monday) if gold is still down so much, it shows that the flight to safety is not going into gold but the dollar.

On the technical front, gold lingered around 1,230. Immediate support stood around $1,220, the 100-day moving average, then the upper band of previous trading range at $1,210. Investors can hold their long positions in the near term.

Silver

Silver fell 1.3 percent to $14.42, still within previous trading range, showing less appetite for riskier assets. Investors shall closely watch the support at the 50-day moving average at $14.50, then the key mark of $14.

II. Commodities
Crude Oil

Oil prices edged lower on Monday, with futures on track for the worst monthly performance since mid-2016, after Russia signaled that output will remain high and as concern over the global economy fueled worries about demand for crude. Brent crude futures fell 28 cents to settle at $77.34 a barrel. U.S. West Texas Intermediate (WTI) crude futures fell 55 cents to settle at $67.04 a barrel.

The Organization of the Petroleum Exporting Countries (OPEC), led by Saudi Arabia and non-OPEC member Russia, agreed in June to lift oil supplies, but OPEC then signaled last week that it may have to reimpose output cuts as global inventories rise.

Fears over the impact to economic growth from escalating trade tensions cast a shadow on demand for crude. Crude prices are expected to keep pulling back in the near term.

Copper

Copper prices steadied on Monday with support from shortages created by tumbling inventories on the London Metal Exchange countering concern over growth and demand because of the U.S.-China trade dispute. Benchmark copper on the LME ended unchanged at $6,160 a tonne, having touched a session high of $6,240.

Profit growth in China’s industrial enterprises hit a six-month low, while revenue growth of main business also hit a new trough in the year. We maintain our bullish view on copper as any any stimulus measures will boost demand for the metal.

Soybean

U.S. soybean futures slid to the lowest point in a month on Monday under pressure from a record-large U.S. harvest and dim export prospects. Chicago Board of Trade November soybeans ended down 6 cents at $8.39 a bushel after earlier hitting a low of $8.37-1/4, the lowest since Sept. 25.

Sell-off accelerated as the contract failed to breach over the resistance of the 50-day moving average. Largely favorable harvest weather in the U.S. Midwest also weighed on price. In the near term, prices are expected to fall further.

 

Dealing Room, ICBC Beijing Branch
                        Cheng Yu


(2018-10-30)
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