Commodities Outlook: Markets trade lower ahead of Powell's testimony

February 27, 2018

London (Feb 27) Precious Metals are trading steady today ahead of Powell's first testimony as the new FED chair. Gold is trading at 1334.00 and Silver is at 16.56 currently.

 The new FED chair Jerome Powell is due to deliver his first semi-annual monetary policy testimony when he appears before the House Financial Services Committee, at 7.00 pm IST today. The minutes of the January meeting indicated that the FED has grown increasingly confident of the economic growth and may consider tightening the policy at a faster pace and it is important to note whether Jerome Powell holds a similar view.

 We believe that the FED’s chair may not sound too hawkish, preferring to stay in line with the three rate hikes as forecasted in early 2017. On the releases front, durable goods orders and consumer confidence should keep the traders active today.

 While the intraday bias remains bullish, the technical bullish setup has come under threat overnight with Gold trading close to key support levels at 1330.0 breaking which further downside to 1320-1310 is expected. Silver find strong support at 16.58 and a breakdown below this could trigger a short selling up to 16.49 in intraday.

Base Metals trade mixed; weaker home sales weigh on prices

 Base Metals are trading mixed today with Aluminum and Nickel trading in green while the rest of complex is down over half a percent each. LME 3-month Copper is down 7074.25, down 0.54% currently.

 The weaker than expected new home sales report continued to weigh on prices overnight. Analysts expected home sales to grow 3.2% in January after a dismal performance in December 2017 but the actual figures missed forecast and the previous figures to drop over 7.8% in January raising concerns over the demand.

 The intraday bias remains mixed for base metals - Copper is expected to drift lower to previous supports of 455-454 today along with Zinc whereas Nickel continues to remain bullish and may attempt to rally to 910-913 in intraday whereas, on the downside, a breakdown below 898 could push prices into a deep corrective phase.

Crude Oil rallies sharply last evening; may extend gains

 Crude Oil is trading lower today after having rallied sharply last evening. WTI is down over half a percent to trade at 63.59 whereas Natural Gas is down 0.71% to 2.66 currently.

 While the short-term outlook, continues to remain bullish we expect oil to correct further ahead of the weekly inventories report. On the downside, support at 63.45 is the decisive level and a breakdown below this level could push prices lower to 63.00-62.85 today. On the upside, a daily close above 64.15 would indicate the resumption of the uptrend and call for prices to retest previous highs in the short term.

 Natural Gas fell sharply last night and is expected to consolidate in the current range. We maintain a bullish outlook on prices and expect the buying pressure to re-emerge once prices close above minor resistance at 177 on a daily basis.



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