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ICBC Trading Strategies of Precious Metal and Commodity Markets - November 20, 2018

I. Precious Metal Market
Gold inched up on Monday, but stayed in a tight range. Spot gold was 0.2% higher at USD1,224.13 per ounce after hitting a one-week high of USD1,225.29 in the previous session. U.S. gold futures GCcv1 settled up USD2.30, or 0.2%, at USD1,225.30. The Federal Reserve is pushing ahead with gradual rate-hike plans next month as it marches toward a more normal policy stance that would keep the economy expanding, New York Fed President John Williams said. Doubts in financial markets are growing. Under such a statement, market investors began to speculate that Federal Reserve may raise interest rate to peak in 2019, thereby putting an end to the crunch period. However, current gold prices are still dependent on Federal Reserve’s interest rate rise in December and next year’s rise prospect. In the short term, as USD remains high, gold prices will see only a slim chance of surge. Indicative of investor sentiment towards bullion, holdings of SPDR Gold Trust (GLD), the world’s largest gold-backed exchange-traded fund, fell 0.2% to their lowest in a week on Friday. It also shows that the upward momentum of gold price is not strong.
On Monday, silver price continued to rebound slightly, and rose 0.2% to USD14.43 an ounce. It was around 50 day moving average. Continuing to maintain the previous judgment, investors can pay attention to the breakthrough of the silver price to the upper key resistance level. If it can break the suppression of 50 day moving average, room for upturn to USD14.80 an ounce can be opened to a certain degree. It is better to continue to wait and see silver prices.

II. Commodity Market
Crude oil
Crude futures rose ahead of settlement in choppy trade on Monday. Brent crude settled up 3 cents at USD66.79 a barrel, strengthening late in the session after earlier hitting a low of USD65.27 a barrel. U.S. crude futures traded 30 cents higher at USD56.76 a barrel in a session that saw swings in a USD2 per barrel range. The market is struggling to find firm footing after a rout that has seen prices fall more than USD20 a barrel since early October on global oversupply fears. The OPEC is pushing allied producers including Russia to join in output cuts of 1 million to 1.4 million barrels per day. In the short term, oil prices will maintain a volatile consolidation pattern.
Copper rose for a fifth straight session on Monday, with investor hopes of a resolution to the U.S.-China trade war outweighing the threat of higher U.S. tariffs on Chinese goods. Three-month copper on the London Metal Exchange ended 0.9% higher at USD6,259 a ton, having gained 2.5% last week. Headline inventories of copper in LME-registered warehouses MCUSTX-TOTAL fell by 9,400 tons to 151,625 tons, nearing last month’s 10-year low of 136,675 tons. The premium for cash copper over the three-month contract CMCM0-3 rose to USD21.50 a ton from USD18.50 on Friday, pointing to a tighter market. It touched USD47 on October 26, its highest since January 2015. In the short run, if Sino-U.S. trade friction continues to mitigate, copper price will continue to rise.
CBOT soybean futures fell 2.1% on Monday, hitting their lowest since November 8, as Asia-Pacific leaders failed to agree on a communique at a summit because of deep divisions between the United States and China over trade. It fell below 10-day, 20-day, 30-day and 40-day moving averages. The U.S. Department of Agriculture said that last week’s export inspection of U.S. soybeans was 1.056 million tons, down from 1.356 million tons in the previous week and far below the 2.276 million tons in the same period last year. Today, CBOT trading volume of soybean, soybean meal and soybean oil were expected to 137,491, 108,195 and 174,863 lots respectively.

Trading Office of Beijing Branch
Cheng Yu
November 20, 2018