Metal market: metals recover after negative dynamics

29.04.2013 15:40
Metal market: metals recover after negative dynamics

YEREVAN, April 29./ARKA/. Prices of precious assets, including gold, were rising from 22 to 26 April. Gold quotes increased in three out of five trading sessions mainly due to physical purchases at low prices. The mixed macroeconomic statistics from the largest economy and less stable positions of the USD also made the gold attractive.

Gold prices jumped to record high on April 25, Thursday, due to positive dynamics at commodity and raw materials market. The prices also climbed amid the purchases by some central banks in order to refill their reserves, according to the IMF. As a result, the gold cost last week ascended by 3.81% to 1,462.07 USD per troy ounce.

The gold perspectives will mainly depend on new market orients this week. The next two-day meeting of the U.S. Federal Reserve over the interest rate will be in the limelight. Its results will be unveiled on Wednesday, May 1. From the latest published protocols from the last meeting it became clear that some members of the Council continue insisting on more austere stance over the monetary policy.

We believe the investors will be really careful and will seek for further orients as the American regulator announces its decision. If the statement doesn’t convey any hints for changes, gold prices may continue rising, otherwise, they will sharply down. The supporting benchmark this week will be 1,395.0 USD per troy ounce.

The gold quotes will also depend on the U.S. macroeconomic statistics. Of the American news we should focus on PMI by  the Institute for Supply Management in a manufacturing sector, the number  of new job openings by ADP agency and the employed in a non-agricultural sector for April. The anticipated moderately optimistic statistics from the overseas can raise the sentiments of the investors and somehow pressure the American currency. Therefore, the gold quotes can up. The resistance benchmark over the next five trading days can be 1,526.0 USD per troy ounce.
We should also highlight another meeting of the ECB over the principal interest rate, and a traditional press briefing of  chairman Mario Draghi. It is commonly believed now that the European regulator can reduce the key interest rate. If this forecast comes true, USD can strengthen its positions thus instigating volatility at the metal market.

Copper prices surged by 1.58% to 3.1755 USD per pound. The prices reached record high mid-week due to some technical factor. In addition, some investors closed their short positions after significant downturn. Optimistic economic statistics from the USA and Great Britain also shed optimism.
Meanwhile, we should note that early last week like late week, the copper quotes were pressured due to weak statistics from China. The new record high reserve of this asset at London Metal Exchange also ensured fall in copper quotes.

Copper dynamics will mainly depend on the U.S. macroeconomic statistics and USD. This statistics is expected to be moderately positive. If the forecasts come true, and PMI as well as the number of new job openings in non-agricultural sector are optimistic, the cost of non-ferrous metals, including copper, will go on rising. The comments about the U.S. economy advancement will also support the copper quotes.

However, if the statistics is not justified, and the decisions of the European and American regulators disappoint the investors, copper prices may tumble. The anticipated weak statistics on business activity in China’s manufacturing sector will also curb the prices from rising. The copper price may vary within 3.00 – 3.35 USD per pound this week.

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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