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ICBC Trading Strategies of Precious Metals and Commodities Market - September 21, 2018
 

I. Precious Metals
Gold

Gold edged up to hit its highest in nearly a week on Thursday as the U.S. dollar slumped, its safe-haven appeal lessened by reduced fears over the near-term impact of Sino-U.S. trade tensions. Spot gold gained 0.2 percent at $1,205.88 per ounce, having hit its highest since last Friday at $1,028.31.

As we said yesterday, the dollar weakened as its safe-haven appeal was lessened after recent strength and the impact of Sino-U.S. trade was priced in the near term. If that trade war actually drags out, receding safe-haven sentiment will also weigh on the dollar. Investors shall closely watch the Federal Reserve’s policy meeting at the end of this month that will determine gold’s future direction.

On chart, gold rose to the 50-day moving average of $1,206, a crossroad for the near-term direction. On trading strategy, investors shall keep bargain-hunting at lows.

Silver

Spot silver increased 0.5 percent to $14.27 an ounce, after touching two-week highs at $14.35. The white metal tracked gold on the same factors. Investors shall closely watch the resistance at $14.5.

II. Commodities
Crude Oil

Oil prices eased on Thursday, pulling back after U.S. President Donald Trump urged OPEC to increase production at its meeting in Algeria, and slowing bullish momentum that had previously propelled the market toward four-year highs.

Brent crude oil settled down 78 cents at $78.70 a barrel. U.S. light crude was down 32 cents to settle at $70.80 a barrel after rising nearly 2 percent on Wednesday. Oil prices were supported by the U.S. sanctions on Iranian supplies and a drawdown in U.S stockpiles in the second quarter after its building in the first quarter.

The Organization of the Petroleum Exporting Countries and other producers, including Russia, meet on Sunday in Algeria to discuss how to allocate supply increases to offset the loss of Iranian barrels. The meeting is unlikely to agree to an official rise in crude output, although pressure is mounting to prevent a spike in prices.

In the near term, oil is expected to be trapped into range-bound trading that is vulnerable to risk event. Investors shall strictly set stop-loss and stop-profit.

Copper

Copper ended two days of gains on Thursday. The base metal jumped to its highest in three weeks on Wednesday after a new round of U.S.-China trade tariffs were not as severe as expected, but investors remained wary about the impact on global economic growth and copper lost steam on Thursday.

Benchmark copper on the London Metal Exchange closed down 0.6 percent at $6,082 a tonne. Copper has slumped 18 percent since touching a 4-1/2 year peak of $7,348 in June but has recovered 5 percent from a one-year low of $5,773 in August.

In the near term, copper is expected to maintain an upward momentum. Investors are recommended to stay in the sidelines, wary about of its strength.

Soybean

U.S. soybean futures rose on Thursday, as higher-than-expected weekly export sales and prospects for more rains the U.S. Midwest sparked a round of short-covering. November soybeans ended up 20-1/4 cents at $8.50-1/4 a bushel after posting a near-four-week top at $8.55.

U.S. Department of Agriculture reported weekly export sales of U.S. soybean at 997,500 tonnes, topping the 400,000 to 900,000 range of trade expectations. Soybean was also underpinned by a Bloomberg report that China plans to cut average tariff on imports of its most trading partners in October. Despite of yesterday’s strong strength, investors shall still remain cautious on the commodity.

 

Dealing Room, ICBC Beijing Branch
                        Qin Gang


(2018-09-21)
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