Commodities Round-up: Gold don't call it a comeback

Friday, 9th April 2021 09:29 - by Rajan Dhall

One of the main stories this week has been the rise in gold prices. The yellow metal is currently 1.63% higher for the week and the US dollar seems to be balancing itself out.

In regards to the fundamentals, the Fed gave us the latest minutes for the FOMC meeting last month, and to be absolutely frank there was nothing new in the report. They are keeping accommodation ample and have no plans to change anything until they meet their employment objectives. Fed's Powell said in a recent statement that the US economic recovery is still looking incomplete and uneven. He then added he is looking for actual progress on the Feds goals and that the March NFP report was a "taste of that brighter outlook". In essence, he is delaying telling the market that the Fed will scale back in the ultra-loose monetary policy.

Looking at the gold chart below, it is looking brighter and it seems the main correlation is now with the dollar rather than risk. This is evident as even when stocks rise gold moves with it and when stocks rise with the dollar gold moves lower. A key level to watch now will be the red-shaded resistance zone at $1773.3/oz. If the bulls manage to take out that level then there could be a sharper move higher but if there is a rejection then lower levels will once again be in focus.

Source: TradingView

The copper market has moved into full sideways consolidation mode. Having said that, the price jumped on Monday as investors assessed the decision by Chile to close its borders during April due to a spike in covid-19 cases. The world’s top exporter of copper closed its borders for a month as reported a daily record of 7,830 infections last week, an all-time high for occupied hospital beds, and a nationwide positivity rate of 11%. A couple of weeks before, workers at Antofagasta's (LSE:ANTO) Los Pelambres copper mine in Chile accepted a three-year contract offer, the local union says, averting a strike at the company's biggest operation.

Now looking at the price there is a firm resistance zone at the high near $4.37/lb. Before that $4.17/lb will need to be broken as it is the consolidation high. Nevertheless, unlike gold, the bulls are fully in charge here and we just need to see if the move higher has stalled.

Source: TradingView

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.