Metal market: wave of pessimism covers gold and copper markets

15.04.2013 15:06
Metal market: wave of pessimism covers gold and copper markets

YEREVAN, April 15. /ARKA/. As we were expecting,  early last week gold prices were slightly climbing amid the disappointing statistics from the U.S. labor market. As a result, on Tuesday, April 9, the gold quotes reached their week record high of 1,590.31 USD per troy ounce.

However, since Wednesday the upturn of gold prices has been  curbed as the protocols from the last meeting of the Federal Reserve were published earlier than expected. The protocols implied the committee members were still arguing around the terms of termination of the quantitative stimulus program. It is noteworthy that in March some members agreed over Federal Reserve’s initiative to continue purchasing the assets till mid-2013. Meanwhile, the others stated the regulator will continue implementing the program till the end of 2013 and in 2014.

The gold quotes were particularly pressured on Friday as the investors went on avoiding to buy this asset. The concerns over the global economy recovery also appeared as pessimistic. Thus, it resulted not only in drop of precious but also industrial metals, oil and bonds of the USA. Moreover, fall in prices for gold lower than the supporting threshold of 1,524.0 USD touched off activation of stop-orders for sales. As a result, price dived even more deeply.  Gold prices downed by 6.02% to 1,482.29 USD per troy ounce. It was the lowest tumble since December 2011.

This week, gold quotes will be pressured amid the outflow of the funds from some metal market units. Gold prices will also continue to stay under the pressure as the market investors reduce their long positions. Such forecasts were published by CFTC (U.S. Commodity Futures Trading Commission) in its last report. The supporting threshold over the next five trading sessions may be 1,450.0 USD per troy ounce.

From an angle of the technical analysis, the outlook for gold quotes deteriorated after they hit through the key supporting threshold of the “bully market.”

Gold dynamics will also depend on macroeconomic statistics from the USA and eurozone. Of the American news we should focus on consumer price index, industrial production and housing market for March. Of the European news we should highlight business sentiment index  of Germany published by ZEW in April, and the eurozone’s consumer price index for March. If the forecasts come true and the inflation rates in the USA and eurozone are lower than the expected annual 1.6% and 1.7% respectively, gold prices can go on diving.

However, if this statistics is better than anticipated, gold quotes can slightly increase. The quotes can get support amid some circumspect purchases in Asia at low prices and partial fixation of the positions after the sharp downturn. The resistance benchmark for gold this week will be 1,510.0 USD per troy ounce.

Copper price last week decreased by 0.34% to 3.3315 USD per pound amid the pessimism at the market of commodity and raw material assets. In addition, U.S. weak macroeconomic data raised bigger concerns around the global demand for copper.
Nevertheless, early last week the copper prices rose to their two-week record high of 3.4495 USD amid the news on foreign trade of China with growing import of the metal. USD weakening also cast optimism here.

Meanwhile, the new record high reserve of this asset at London Metal Exchange also ensured fall in copper quotes.

This week, copper cost will mainly depend on economic statistics from the USA (particularly housing and industry market for March) and China. On Monday, April 15, China is expected to release much of statistics : first-quarter GDP, industrial production and retail trade in March.
According to the forecasts, China and the U.S. will release some optimistic statistics, and as a result, copper prices can climb to 3.40 USD per pound.

However, if the statistics is disappointing, copper prices can tumble to 3.24 USD per pound. From an angle of the technical analysis, we assess mid-term outlook for this asset as negative while the prices remain lower of 3.4782 USD per pound.

Mikael Verdyan, an analyst at FOREX CLUB, specially for ARKA news agency.
The opinion of the author does not necessarily reflect that of the agency. —0-

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