. Daily Commodity Analysis - Copper Rebounds, Silver Struggles Amid Fed's Hawkishness.

Daily Commodity Analysis – Copper Rebounds, Silver Struggles Amid Fed’s Hawkishness.

Daily Commodity Analysis – Copper Rebounds, Silver Struggles Amid Fed’s Hawkishness.

21 Sep 2023

Introduction:

Copper prices rebounded slightly after a week of losses, with a 0.2% uptick to $3.7453 per pound. However, overall, copper futures were down 1.5% for the week. The resilience of the U.S. economy and potential Chinese monetary support offered some relief to the red metal. Meanwhile, in the silver market (XAG/USD), the Federal Reserve’s tightening and a stronger U.S. dollar are expected to limit upside potential, with market concerns growing as the Fed hints at future rate hikes. In the broader commodity market, gold prices declined following the Fed’s warning of prolonged high interest rates, while oil faced pressure due to supply forecasts and expectations of U.S. rate increases.

Copper:

Copper rises but declines for the week.

After suffering significant losses earlier this week, copper prices among industrial metals modestly increased. Though up 0.2% to $3.7453 per pound, copper futures were down 1.5% for the week.

The U.S. economy’s resiliency, which may sustain industrial activity and copper demand in the months ahead, provided some support for the red metal.

The People’s Bank of China said it was prepared to provide additional monetary support if necessary, and attention was also paid to any additional stimulus measures from China.

However, the PBOC maintained its loan prime rates steady on Wednesday as it tried to balance promoting economic growth with averting currency depreciation.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 3.69 | Negative Crossover | Bearish
  • MA 20: 3.73 | Negative Crossover | Bearish
  • MA 50: 3.75 | Negative Crossover | Bearish

Simple:

  • MA 5: 3.70 | Negative Crossover | Bearish
  • MA 20: 3.74 | Negative Crossover | Bearish
  • MA 50: 3.76 | Negative Crossover | Bearish

RSI (Relative Strength Index): 32.02 | Sell Zone | Bearish

Stochastic Oscillator: 3.89 | Sell Zone | Negative

Resistance And Support Levels: 

  • R1: 3.74 | R2: 3.86
  • S1: 3.65 | S2: 3.53

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 3.61 | Take Profit: 3.53 | Stop Loss: 3.67

SILVER:

Upside of XAG/USD Limited by Fed Tightening and Strength of US Dollar.

The combination of a strong currency, rising rates, and a hawkish Fed approach may limit the upside potential of XAG/USD.

The performance of silver (XAG/USD) on Thursday seemed a little cautious as the U.S. dollar and bond rates advanced. The Federal Reserve recently hinted at a forthcoming rate hike this year and a change in their easing approach, which is anticipated to persist until 2024. This constraint follows on the heels of such announcements.

The U.S. Fed’s recently revised economic outlook overshadowed the precious metal’s recent top, the highest since September 6th. This forecast raises the possibility of sustained higher rates, which will cause market anxiety. Even so, some investors continue to find the silver market to be appealing since it offers protection against a rapid decrease.

Technical Overview :

Moving Averages:

Exponential:

  • MA 5: 23.19 | Positive Crossover | Bullish
  • MA 20: 23.13 | Positive Crossover | Bullish
  • MA 50: 23.25 | Negative Crossover | Bearish

Simple:

  • MA 5: 23.18 | Positive Crossover | Bullish
  • MA 20: 23.03 | Positive Crossover | Bullish
  • MA 50: 23.31 | Negative Crossover | Bearish

RSI (Relative Strength Index): 51.5 | Buy Zone | Positive

Stochastic Oscillator: 51.47| Buy Zone | Negative

Resistance And Support Levels: 

  • R1: 23.33 | R2: 24.39
  • S1: 22.80| S2: 22.20

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 23.71 | Take Profit: 24.39 | Stop Loss: 23.33.

Elsewhere In the Commodity Market.

Following the Federal Reserve’s warning that U.S. interest rates will remain high for longer, gold prices declined on Thursday as investors drastically cut their price forecasts for the yellow metal in the coming months.

Oil declines due to a tight supply forecast and expectations of US rate increases.

Gold down (0.36%) at 1923.64, Silver down (0.23%) at 23.16, Palladium down (0.46%) at 1254.18, Platinum down (0.98%) at 918.22, Brent Crude Oil down (0.99%) at 92.62, WTI Crude Oil down (0.98%) at 88.81 as of writing time.

Key Economic Events & Data Release Today:

(USD) FOMC Press Conference at 12:00.

(EUR) ECB President Lagarde Speaks at 19:30.