Safe haven gold and silver up on risk-off play, oil lags following API surplus and trade woes
Worsening US-China trade talk hopes take oil prices lower, while safe haven play aids both gold and silver.
GOLD: US central bank easing and rate cut likelihoods aids the non-yielding precious metal
It was a risk-off safe haven play yesterday, with yields and indices dropping and gold registering a higher finish against the greenback. The catalysts always seem to be plenty for gold, be it rising rate cut likelihoods out of the US Federal Reserve (Fed) meeting towards the end of this month, central bank balance sheets set to rise putting more liquidity into the system, geopolitical tensions that are failing to subside, and diminishing hopes for US-China trade talks before they’re even set to begin tomorrow. Overall, while the technicals are looking more positive with its price crossing back above its 50-day moving average (MA) – the last of its main MA’s – the daily outlook remains more consolidatory unless a fundamental catalyst can push its price past its pivot points, but where the weekly outlook remains a stalling bull trend technical overview.
SILVER: Outperforming relative to gold but still relatively range-bound
As with gold, its precious metal cousin managed to finish higher for the session posting a larger percentage gain, with its price crossing back above its 50-day moving average (and now above all its main long-term daily MA’s). The volatility has a tendency to be higher for this pair’s price, and hence taking its cue from where gold and the greenback may go first might be more ideal before initiating a trade here, and going for contrarian breakout strategies should any further fundamental catalyst(s) occur with tonight’s Fed minutes or tomorrow’s US-China trade talks.
OIL – US CRUDE: Diminishing trade hopes and an API surplus keeps energy back near the lows
American Petroleum Institute's (API) estimate regarding US crude oil inventories came in at a 4.13M surplus following last week's 5.9M deficit, though if last week is any indication, Energy Information Agency's (EIA) more encompassing estimate this evening may contradict that with expectations for a more modest 1.8M surplus. US-China trade talks starting tomorrow matter in the context of demand, while supply side factors will continue to look towards geopolitical tensions that are rising more in the Middle East. The EIA’s short-term energy outlook revised its oil price downwards again, but a supply side shock always leaves the energy commodity vulnerable to an upside breakout, but tested to the downside in the absence of it. While the technical bias remains negative, keep in mind that on the weekly volatile breakout strategies are more ideal if/when any significant news breaks.
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
“Managing risk, size and strategies” seminar
Join our free seminar on Tuesday Dec 10 at 6:00pm and get a better understanding of how to utilize size management when opening a trade and how to find the ideal risk/reward balance.
Live prices on most popular markets