Commodities Outlook: Precious Metals trade steady, sharp declines in Base Metals and Oil

December 5, 2017

London (Dec 5)  Precious Metals are trading steady today as the market looks to the progress on the tax reform legislation and the situation in the Korean peninsula. Gold futures are trading marginally higher at 29160, up 27 points whereas Silver is at 38167, unchanged from its previous close.

 Precious Metals continue to consolidate near weekly support levels and with the year-end holidays approaching fast, the lack of market moving events could see the risk of keeping metals stuck to the broad trading range in December.

 The market is already pricing in a 93% chance of a December rate hike and more in the following year but the lack of developments in the Korean region has seen safe-haven demand fade over the last month.

 The dollar index has strengthened over the recent few days and with stock markets are yearly highs the interest in bullions has been declining over the past few weeks. On the data front, we have services and non-manufacturing PMI report from the US.

 Technically, support comes in at 29080-29000 in intraday whereas, on the upside, resistance is seen at 29300. Silver is expected to find support in the zone of 37500-38000 whereas, on the upside, resistance is seen at 38800 today.

Base Metals fall sharply despite strong data from China

 Base Metals came down sharply today despite stronger data from China. Copper and Nickel, both are down nearly two percent at 434.50 and 717.70 respectively followed by Zinc at 203, down 0.90%.

 Base Metals fell despite the Chinese services PMI recording a growth in November at 51.9 from 51.2 previously. The intraday bias is likely to remain inclined to the downside with strong support for Copper coming into play at 432-430 with a daily close calling for further downside to recent lows of 425-422 in the next few days.

 On the upside, a break above resistance at 445 should see the short-term upside in Copper resume for price objectives at 464-465 over the next few weeks.

Crude Oil declines on profit booking; short-term trend remains positive

 Crude Oil is extending losses for the third day as profit booking pushed oil prices lower by 31 points or 0.81% to 3684 whereas Natural Gas was down nearly a percent to trade at 189.90 today.

 The API is due to release its weekly inventories report tonight with analysts expecting a decline of about 3.5 million barrels in the previous week. With OPEC’s agreeing to extend its production cut through 2018, the market is facing resurgent threats of increasing oil production from the US shale producers as prices move up in line with declining supply.

 Along with the inventories report scheduled tomorrow, the production levels in the US will be key in determining the future of oil prices in the short term.

 Oil finds a strong support at 3660 and a daily close below this could see a deeper decline in prices down to 3600-3550 in the current week whereas, on the upside, 3740 is the level to watch out for. The short-term trend continues to remain positive on Crude Oil.


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