Talking Points:
- Oil supported by weak USD and potential withdrawal of US exports ban
- Gold soared as interest rate hike was postponed, for now
- Copper pared gains from Chile mine halts, after Fed alerted of weak growth
Copper pared earlier gains from supply disruption as market focused on Janet Yellen’s statement on slow growth as a contributing factor to thedecision to keep rate unchanged. This seemed to strike a nerve with copper investors and price dropped around 1.46 percent during the Asian morning.
The metal returned to closely watching Chinese economy and stock market, after the hype on Fed meeting wears off. It has mimicked the Shanghai Composite to gingerly head up after forming a double-bottom out of 2.4330, the low of yesterday and today.
After mine closings due to slumping prices, supply threats piled from Chile earthquake on Wednesday. Copper climbed to the highest since July 21 at 2.4930 after some mines reportedly paused operation in precaution to aftershocks, although many of them were not damaged and expected to resume production soon.
Gold rocketed to 1133.93 after a US rate rise was deferred at Fed’s September meeting, although profit-taking brought it back under 1130 by Asian noon time. The aforementioned top was merely below the 38.2% Fibo and firm resistance level at 1136.6, therefore future attempts on the upside may face considerable opposition.
Gold will continue to move in reverse to USD, although there is not yet evidence of post-Fed adjustments in gold held by exchange traded funds (ETF) according to data compiled by Bloomberg.
Oil fluctuated with the US dollar, although it quickly stabilized above 46.63 for WTI and 49.06 for Brent, and remained so during the Asian morning. Among the two, Brent is more fragile on the downside after it dipped to a 48.32 bottom yesterday just before Fed’s announcement.
Fed’s decision to keep rate unchanged and the ensuing US dollar weakness should keep oil prices somewhat elevated until the weekend. Additional support came as the House’s Energy and Commerce Committee voted through a bill to drop the ban of most crude oil exports. A final verdict will be reached by the full House at month-end.
Another good news for oil traders was that China will start oil future trading as early as mid-November on the Shanghai International Energy Exchange, reported by Securities Times. This would no doubt add more depth and volatility to Asian oil market, and present opportunities along with it.
GOLD TECHNICAL ANALYSIS – Similar to oil, gold also approached the 38.2% Fibo at 1132.7, although this resistance level may stay weak given a clear upward momentum shown in the daily chart. If a break eventuates, the gold bulls may expect moves towards the next Fibo at 1151.79. The downside of gold should be well supported with an immediate support at 5-day moving average at 1118.54.
Daily Chart - Created Using FXCM Marketscope
COPPER TECHNICAL ANALYSIS – Copper touched down to yesterday’s intraday support at 2.4320 and effectively formed a double bottom which may hold throughout the rest of today. On the upside, the daily chart shows that the rally after Fed paused just below 38.2% Fibo at 2.4899. The bulls should keep a close watch of this level before entering positions. High volatility may proceed for the rest of this week and likely stem from intraday swings rather than directional bets.
15-minute Chart - Created Using FXCM Marketscope
CRUDE OIL TECHNICAL ANALYSIS – WTI oil flattened out post-Fed meeting with a floor established in the 46.50s area, corresponding to the daily lows on 17 and 18 September. Brent oil mirrored the moves and the two indicators have faded into the background amid high volatility in other commodities. The daily chart shows WTI lingering near 38.2% Fibo at 46.92, which may act as a pivot level for prices in the next few sessions.
