ICBC Trading Strategies of Precious Metals and Commodities Market - October 19, 2018
I. Precious Metals Gold
Gold rose on Thursday as renewed weakness in global stock markets spurred investors to seek refuge in bullion, which has also been helped by an improved technical outlook. Spot gold rose 0.3 percent to $1,226.11 per ounce . U.S. gold futures settled up $2.7, or 0.22 percent, at $1,230.10 an ounce.
U.S. stocks fell on Thursday as weak earnings reports from industrials raised worries over rising expenses and the impact of tariffs, adding to concerns of higher borrowing costs after hawkish commentary in the U.S. Federal Reserve's minutes.
On technical front, gold was kept below the 100-day moving average at around $1,227, after multiple failed tests. We maintain our view that gold is expected to trade between the 100-day moving at $1,200 and the 100-day moving average at around $1,227, with the next support at $1,215.
Silver was down 0.2 percent at $14.59 per ounce, having earlier touched its lowest since Oct. 11 at $14.41. Prices recovered after hitting of the 50-day moving average of $14.50, reaffirming the support at this level. We maintain our view that a new round of rally will kick off after consolidating at the same level.
II. Commodities Crude Oil
Oil prices fell on Thursday as investors' concerns returned to the impact an escalating trade row between China and the United States will have on oil demand growth and data showing ample supplies.
Brent crude settled at $79.29 per barrel, down 76 cents. U.S. crude was down $1.10, or 1.6 percent, at $68.65. Earlier, Brent fell below $79 per barrel the day after a U.S. Energy Department report showed oil producers had put 22 million barrels in storage tanks over the past four weeks. U.S. refineries entering maintenance season, in which major plants go offline for four to six weeks, has also weighed on crude demand and prices.
After yesterday’s decline, oil prices has breached below the support of the 50-day moving average. We maintain our view that sharp losses will build a weakened pricing environment, and prices lower $70 will drive some investors out, accelerating the downward momentum. The next support can be found at the 100-day moving average of $67.34.
LME copper slipped 1 percent to end at a one-week low of $6,157 a tonne. Macroeconomic concerns continued to bedevil the industrial metals sector. Generally the base metals complex is under pressure from outside influences, such as the Fed comments.
Chinese Premier Li Keqiang said China's economy faced increasing downward pressure, ahead of GDP data due on Friday. Copper prices are expected to fall to the 50-day moving average of around $6,105, if economic data came short of expectations.
U.S. soybean futures fell more than 2 percent on Thursday on disappointing weekly export sales and improving U.S. harvest weather, analysts said.
Chicago Board of Trade November soybeans futures settled down 22-1/4 cents at $8.63-1/2 per bushel. December soymeal fell $7.4 to $316.30 per short ton. December soyoil slid 0.54 percent to 29.02 per pound.
U.S. Department of Agriculture reported export sales of U.S. soybeans in the latest week at 295,600 tonnes, below a range of trade expectations. The figure included cancellations of 694,400 tonnes of soybeans sold to unknown destinations.
China's soybean imports are set to drop by a quarter in the last three months of 2018, their biggest fall in at least 12 years as buyers curb purchases amid the Sino-US trade war and high domestic stockpiles.