Precious Metals extend losses on the dollar, Base Metals and Oil trade steady

May 17, 2018

London (May 17)  Precious Metals are trading mixed today with Gold at 1287.10, down 0.34% whereas Silver is at 16.39, up 0.15% currently.

 Gold broke below its key psychological support at 1300.0 breaking out of the trading range of 1365.0-1300.0 which was tested on multiple occasions this year.

 The sharp losses come as the dollar index recovered sharply this week and tested its highest level this year of 93.63 driven by strong macro data increased chances of a rate hike from the Federal Reserve.

 The focus today will be on unemployment claims which may have increased 4,000 to 215,000 according to market consensus - a weaker report may possibly trigger a short covering move in precious metals today.

 Technically, the break of 1300.0 support and sustained trading below the 200-day ma should see prices come under further pressure but given that prices have retraced to 0.618 Fibonacci support also indicates that the correction might be a temporary leg of the dynamic up move we saw in the long term.

 On MCX, 30900.0 acts as a strong support and a daily close below this may indicate further weakness in prices whereas, on the upside, a break above resistance at 31000.0 could see a recovery in prices in the short term.

Base Metals steady within a range; intraday bias mixed

 Base Metals are trading with a neutral bias today with Nickel being the best performer at 14645.0, up 1.37% whereas Aluminum is down 1.61% to trade at 2269.25 currently. LME Copper futures are up 0.42% to trade at 6875.25 currently.

 Base Metals continue to trade with a mixed bias as the lack of fresh events keep prices within a broad range. The metals remain supported after strong economic releases and housing prices from China continue to keep prices supported whereas concerns over increasing inventories on LME and trade talks between the US and China continue to weigh on prices in the short term.

 Copper is trading with a positive bias and is likely to move higher to test resistance at 465.0-466.0 in the short term. Aluminium, Lead and Zinc are expected to trade with a slight negative bias whereas Nickel should also move higher in intraday.

Crude Oil extends gains on inventories; Geopolitical tensions support

Crude Oil is trading at 72.08, up 0.83% whereas Natural Gas is trading almost unchanged at 2.81, up 0.07% currently.

 Crude futures rallied to its highest level since November 2014 with Brent testing a high of 80.12 in early trade as a combination of lower inventories and fears of sanctions on Iran from the US continued to propel prices higher in the short term.

 Meanwhile, global inventories of oil have dropped sharply in recent months on robust demand and production cuts by top oil-exporting nations, especially by OPEC and Russia which helped clear a global glut.

 The situation remains precarious as the market reacts and adjusts to possible sanctions but a sharp correction should be expected if both the countries reach an agreement.

 The short-term trend continues to remain positive with resistance coming into play at 4890.0-4920.0 whereas, on the downside, 4800.0 should be the key level to watch out for.

 The negative divergence between momentum indicators and prices also indicate a potential short-term correction in oil prices in the immediate future.


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