Talking Points:
- Gold prices edged up as risk retreated and the Fed is expected to hold rate unchanged
- Oil prices lowered ahead of weekly inventory data by EIA
- Copper prices slipped on weak demand outlook and growing inventories
Copper prices slipped for a second session on Tuesday amid doubts about global demand and rising inventories. Prices have fallen 1 percent to $2.2325 by the Asian afternoon, easing further from a five-week high at $2.3055 last week. Bloomberg reported that copper stockpiles in London Metal Exchange warehouses jumped to the highest volume since March 21 on Monday. U.S. new home sales data dropped a third month in March, hinting at a slowdown in the construction sector and in demand for industrial metals.
Gold prices edged up towards $1243 amid a retreat of risk assets and lower expectation for a rate rise by the Fed. Asian stocks receded as investors braced for upcoming central bank policy meetings in the United States and Japan. The dollar index slid 0.12 percent. Soft German business sentiment and US housing datasignalled slowingeconomic growthand possibly stagnant inflation. This reduced the expectation that the Fed may raise interest rates.
WTI oil prices lowered to $42.50 ahead of a weekly inventory report by the Energy Information Administration on Wednesday (US). Concerns about the oversupply lingered as Iran continued to ramp up production to regain market share, following a failed output freeze deal. The market does not shows signs to rebalance yet, hence downside risk may emerge in the short term.
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GOLD TECHNICAL ANALYSIS – Gold prices ticked up although volatility remained low and the metal traded rather muted. Weak momentum signals do not offer hint on any upcoming direction. Gold seems to be well contained within a 2-month range of 1207.6-1284.6.
Daily Chart - Created Using FXCM Marketscope
COPPER TECHNICAL ANALYSIS – Copper prices eased for a second day although they remain near the upper boundary of the range and 2016’s high. An inherent downward momentum is emerging thus copper may extend further on the downside, all the way towards a support level at 2.1485.
Daily Chart - Created Using FXCM Marketscope
CRUDE OIL TECHNICAL ANALYSIS –Oil prices held up near 23.6% Fibonacci at $45.24 despite a short-term downside bias. Prices may linger at the current levels or retraced down to recent daily highs around the $42 mark. Downside risk seems limited in the longer term.
Daily Chart - Created Using FXCM Marketscope
--- Written by Nathalie Huynh, Currency Strategist for DailyFX.com
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