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ICBC Trading Strategies of Precious Metals and Commodities Market - September 25, 2018
 

I. Precious Metals
Gold

Gold was barely changed on Monday after the dollar dropped following remarks by the head of the European Central Bank then later pared losses, although activity was muted ahead of a U.S. central bank meeting this week.

Spot gold increased 0.04 percent at $1,199.57 per ounce, giving up earlier gains. U.S. gold futures December delivery settled up $3.10, or 0.3 percent, at $1,204.40 per ounce. Liquidity was thin during Asian trading hours on Monday as markets in Japan and China were closed for a holiday.

Gold had been consolidating for the past month, remaining stable at around $1,200. While the dollar bounced off highs, and is expected to keep its downtrend. Investors await details from the Federal Reserve meeting concluding on Wednesday, when the U.S. central bank is expected to raise benchmark interest rates and shed light on the path for future rate hikes.

Meanwhile, speculators increased their net short position in COMEX gold contracts in the week to Sept. 18, U.S. data showed on Friday. Bullion is expected to remain range-bound in the near term.

Silver

Silver rose 0.3 percent at $14.29 an ounce. Its investment value surfaced as prices were at multi-year trough. A rally in gold prices will push up silver prices at a faster pace.

II. Commodities
Crude Oil

Global Benchmark Brent crude jumped more than 3 percent on Monday to a four-year high above $80 a barrel. The Organization of the Petroleum Exporting Countries and non-OPEC states, including top producer Russia, gathered in Algiers on Sunday for a meeting that ended with no formal recommendation for any additional supply boost to counter falling supply from Iran.

Brent crude settled up $2.40 or 3.1 percent at $81.20 a barrel, after touching an intraday high of $81.39, the highest since November, 2014. U.S. light crude settled up $1.30, or 1.8 percent, higher at $72.08.

U.S. commercial crude oil inventories are at their lowest since early 2015. While U.S. oil production is near a record high of 11 million bpd, subdued U.S. drilling points toward a slowdown in output. Recent short supply will continue to boost oil prices.

Copper

Copper prices slipped on Monday. Liquidity was thin as markets in Japan and China were closed for a holiday. Investors shrugged off U.S.-China trade war as the trade dispute that is expected to hit global economic growth were less severe than expected. Beijing also canceled trade negotiations with the United States, highlighting vulnerability of the trade talk.

Hedge funds and money managers cut their net short position in COMEX copper contracts in the week to Sept. 18, U.S. Commodity Futures Trading Commission (CFTC) data showed. Trade war will determine copper prices. Investors shall closely watch the resistance at the 100-day moving average.

Soybean

U.S. soybean futures fell on Monday as increasingly bitter U.S.-China trade dispute fueled concerns over U.S. Soybean export. November soybeans ended down 6-3/4 cents at $8.40-1/2 a bushel.

Soybean futures will remained subdued as China - the world's top buyer of the oilseed - and the United States imposed fresh tariffs on each other's goods as part of an escalating trade war. The trading volume of CBOT soybeans, soymeal and soyoil was expected at 116,788 lots, 101,249 lots and 140,470 lots.

 

Dealing Room, ICBC Beijing Branch
                        Cheng Yu


(2018-09-25)
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