Commodities Outlook: Precious Metals extend losses whereas Base Metals and Crude Oil trade steady

December 12, 2017

New York (Dec 12)  Precious Metals continue to extend losses as the two-day FOMC meeting begins today. Gold futures are trading at 28185, down 162 points or 0.57% whereas Silver is barely changed today at 36923 today.

 The Federal Reserve is expected to raise interest rates in the December meeting as the central bank remains confident of the economic recovery in the short term.

 The market is expected to dissect the economic projections and forecasts to understand the pace of future rate hikes as the FED steps into the guidance of Jerome Powell who is largely expected to follow in the footsteps on his predecessor Janet Yellen.

 On the data front, we have producer prices which are expected to slow down in November and could boost precious metals in intraday.

 The next support zone is seen at 28100-28000 and we expect downsides to be limited to this level before the FED meeting whereas on the upside, a breakout above resistance at 28250-300 could see a short term upside in Gold.

Base Metals trade steady as Chinese imports improve in November

 Base Metals are trading steady but with a negative bias despite stronger imports for base metals according to the Chinese customs report. Aluminum, Nickel and Zinc are trading in red, losing about half a percent each whereas Copper is at 431.75, unchanged currently.

 Base Metals are expected to weaken further as inventories on LME trend higher forcing further profit booking ahead of the holidays. Copper is likely to fall further if it breaks below support at 429 whereas on the upside a move above 433 may see another round of recovery this week.

 On the way lower, support is seen at 425-422. The short term trends in base metals continue to remain weak as traders book profits amidst concerns of slowdown in China.

Crude Oil extends gain as supply disruptions support prices

Crude Oil is trading higher today supported by supply disruptions in the US with Crude Oil trading at 3770, up 54 points or 1.40% currently. Natural Gas is also marginally higher at 183.0 at the time of writing this.

 The upside in WTI variant is being driven by a quick upside in Brent prices. The Forties pipeline which carries over 450,000 barrels of oil (which is about 40% of UK produce) was shut down recently for maintenance after a hairline fracture was found in the pipeline.

 Brent, which is global benchmark shot up quickly pushing WTI prices higher in the overnight session. The key concern remained that repairs could take weeks which could cause in a shortage in stored supply in the next weeks.

 The short term upside in oil should gather momentum once prices break above resistance at 3800-3810 whereas on the downside, a break below 3700 could push prices to previous week’s lows and see oil enter into a consolidation phase.


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