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ICBC Trading Strategies of Precious Metals and Commodities Market-June 22, 2017
 

I. Precious Metals
Gold
Gold rebounded at $1,245.46 an ounce on Wednesday, with support above the 200-day moving average. Market widely expected a 25 bps increase in June and September, and balance sheet tightening in December, ahead of the FOMC meeting in June. Investors now expect that the central bank will cut its balance sheet in September and raise rates again in December after the Federal Reserve raised interest rates in June and said it would begin cutting its holdings of bonds and other securities this year. But the accelerated pace of tightening will hurt economic growth especially amid recent weak inflation data. The S&P 500 slipped for two consecutive days after hitting record highs. Investors shall closely watch the stock market as precious metals will be boosted by sharp losses in equities.

Silver
Silver fell at $16.3972 an ounce. It tracked gold this week, trading in a tight range with support at previous key levels. The white metal had lost over 7 percent since June, paring most of gains made in May. On technical front, the momentum column of the MACD index showed a relatively bearish tone, but with the downward momentum shrinking. On trading strategy, investors may continue to stay on the sidelines.

II. Commodities
Crude Oil
Oil prices ended down over 2 percent on Wednesday in volatile trade. U.S. crude futures settled at $42.53, down 1.6 percent, while Brent crude futures settled down 2.6 percent at $44.82 a barrel. Saudi Arabia's King Salman made his son next in line to the throne on Wednesday. The 31-year-old Mohammed bin Salman, replacing his cousin, Prince Mohammed bin Nayef, is expected to maintain the consistency of the kingdom’s policy after succeeding to the throne. But the breaking news failed to boosted oil prices as the OPEC delegates downplayed the idea of a new cut, citing the difficulty of getting Iran to cap output. Both WTI and Brent crossed below previous supports despite of a drawdown in U.S. oil stockpiles. Without signs of stabilization, investors are recommended to stay on sidelines.

Copper
Copper rose on Wednesday in response to a retreat in the U.S. dollar from its recent peaks and evidence of tightening supply. The dollar dipped versus a currency basket after touching a five-week peak on Tuesday, with a slump in oil prices to seven- month lows calling into question the impact of inflation on the pace of future interest rate hikes. A weaker dollar makes dollar-priced metals cheaper for non-U.S. Investors. The global world refined copper market showed a 5,000 tonnes deficit in March, compared with a 102,000 tonnes surplus in February, industry data showed on Tuesday. Three-month copper on the London Metal Exchange ended up 1.6 percent at $5,745 a tonne, having hit its lowest since June 8 at $5,630 earlier.

Soybean
U.S. soybean futures declined on technical selling and as forecasts called for benign crop weather in the U.S.. Chicago Board of Trade July soybeans fell 9 cents at $9.18-3/4 a bushel. Rumors that China ordered more soybeans from Brazil weighed on the market. Analysts expected that soybean sales were between 350,000-750,000 metric tons ahead of the USDA Weekly Export Sales report. The trading volume of soybean, soymeal and soyoil stood at 213,940 lots, 100,766 lots and 144,597 lots respectively.

Dealing Room, ICBC Beijing Branch
Qin Gang


(2017-06-22)
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