DailyFX.com -

Talking Points

  • WTI pushes towards critical resistance ahead of key inventories data
  • Platinum and Palladium soar as supply disruption fears continue
  • Copper retreats as China demand concerns weigh on prices

Crude oil is edging towards the critical $105.00 handle in early European trading, ahead of the release of US inventories data due later in the week. Meanwhile platinum and palladium prices have soared on fears over further supply disruptions from South Africa, as the mining workers strike lingers. Finally copper prices continue to crumble, likely on the back of demand concerns from China with fresh economic data from the Asian giant on tap over the remainder of the week.

WTI Pushes Higher Ahead of Inventories Figures

Crude oil hit the highest level since March 3rd as traders pushed prices towards the psychologically-significant $105.00 mark. Speculation over a bullish reading from upcoming inventories data may be offering some support to the commodity. The Department of Energy’s Weekly Petroleum StatusReport due on Wednesday is tipped to reveal a further decline in total crude stockpiles by 1,500 according to the median estimate from economists.

The recent fall in total crude inventory levels may reflect a rise in demand, which has acted to mop up some of the excess supply witnessed earlier in the year. A further decline in stockpiles would likely be taken as a bullish signal for the growth-sensitive commodity.

Platinum and Palladium Soar

A breakdown in negotiations to end the 5-month long mining strike in South Africa’s platinum mining belt has likely bolstered prices for the precious metal in recent trade. Platinum soared by more than 0.8 per cent in late Asian trading, while palladium jumped to the highest level since August 2011. The ongoing strike has created fears over supply disruptions, given that South Africa accounts for roughly 70% of global platinum production, and is the world’s second-largest palladium producer. While at this stage a resolution to the standoff remains out of reach, an eventual deal could cause traders to unwind fear-driven positioning and leave platinum vulnerable to a pullback.

China Demand Concerns Crimp Copper

Copper has come under further selling pressure in Asian trading today, likely on the back of concerns over falling demand from China. Recent trade figures from the manufacturing powerhouse revealed a decline in ore and concentrate imports for copper to the lowest level since 2012. With a raft of economic data from the Asian giant on tap over the remainder of the week, the growth-sensitive commodity may face further falls on a set of downside surprises. Indeed, the drop in Chinese Industrial Production figures for April to the lowest level since 2009 did little to inspire confidence in the country’s commodities appetite.

Crude Oil Nears Key Resistance, Copper Drops Ahead of China Data

CRUDE OIL TECHNICAL ANALYSIS

WTI is once again teasing traders near the psychologically-significant 105.00 handle, which follows a push off the 101.30 mark. Additional support has been provided to the commodity by the ascending trend line from the 2014 low, which has resulted in the appearance of a triangle formation. A daily close above 105.00 would open up the next definitive level near 108.40. However, if we see another bearish reversal candlestick pattern emerge, it would suggest a potential pullback.

Crude Oil: Breakout From Triangle Formation Looks Imminent

Crude Oil Nears Key Resistance, Copper Drops Ahead of China Data

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD TECHNICAL ANALYSIS

The gold bears are keeping the precious metal capped below resistance at 1,258 for now. Several bearish technical signals for the commodity are hinting at a retreat back towards support at 1,238. These include the presence of a downtrend signaled by the 20 SMA, as well as the Rate of Change indicator suggesting strong downside momentum.

The DailyFX Speculative Sentiment Index suggests a mixed bias for gold based on trader positioning.

Gold: Bearish Signals Hint At Retreat To Support

Crude Oil Nears Key Resistance, Copper Drops Ahead of China Data

Daily Chart - Created Using FXCM Marketscope 2.0

SILVER TECHNICAL ANALYSIS

The critical 19.00 handle has been breached as the silver bulls stage a modest return. However, a daily close above the descending trend line would be required before suggesting the potential for a further recovery.

Silver: Breaches Critical $19.00 Level

Crude Oil Nears Key Resistance, Copper Drops Ahead of China Data

Daily Chart - Created Using FXCM Marketscope 2.0

COPPER TECHNICAL ANALYSIS

Copper prices have continued to crumble following the break below the ascending trend line and support at 3.10. The collapse occurred following the emergence of a Dark Cloud Cover candlestick pattern near resistance at 3.19. Some tentative buying support appears to be at the 50% Fib Retracement level at 3.034, which has created a Hammer formation on the daily. However, the bullish reversal pattern would need to see confirmation from a successive up day before being confirmed.

Copper: Retreats To Fib Level

Crude Oil Nears Key Resistance, Copper Drops Ahead of China Data

Daily Chart - Created Using FXCM Marketscope 2.0

PALLADIUM TECHNICAL ANALYSIS

As suggested in recent commodities reports Palladium was eyeing a run on the August 2011 high at 847. Several bullish technical signals remain for the precious metal including the continued presence of an uptrend on the daily (signaled by the 20 SMA and ascending trend channel). A daily close above 847 would open the next definitive level at 861.

Palladium: Prices Push Multi-Year Highs

Crude Oil Nears Key Resistance, Copper Drops Ahead of China Data

Daily Chart - Created Using FXCM Marketscope 2.0

PLATINUM TECHNICAL ANALYSIS

Following the bullish candlestick pattern near support at 1,424 platinum looks to be making a run at the range-top near 1,489. Traders should note that the ATR is currently at multi-year lows and that anemic levels of volatility generally favor range-trading strategies.

Platinum: Pushes Towards Range-Top

Crude Oil Nears Key Resistance, Copper Drops Ahead of China Data

Daily Chart - Created Using FXCM Marketscope 2.0

Written by David de Ferranti, Currency Analyst, DailyFX

To receive David’sanalysis directly via email, please sign up here

Contact and follow David on Twitter: @DaviddeFe

Related Articles
  1. Mutual Funds & ETFs

    ETF Analysis: ProShares UltraPro Nasdaq Biotech

    Obtain information about an ETF offerings that provides leveraged exposure to the biotechnology industry, the ProShares UltraPro Nasdaq Biotech Fund.
  2. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI Europe Financials

    Learn about the iShares MSCI Europe Financials fund, which invests in numerous European financial industries, such as banks, insurance and real estate.
  3. Mutual Funds & ETFs

    ETF Analysis: SPDR S&P Insurance

    Learn about the SPDR S&P Insurance exchange-traded fund, which follows the S&P Insurance Select Industry Index by investing in equities of U.S. insurers.
  4. Mutual Funds & ETFs

    ETF Analysis: SPDR S&P Emerging Markets Small Cap

    Learn about the SPDR S&P Emerging Markets Small Cap exchange-traded fund, which invests in small-cap firms traded at the emerging equity markets.
  5. Mutual Funds & ETFs

    ETF Analysis: ETFS Physical Platinum

    Learn about the physical platinum ETF. Platinum embarked on a bull market from 2001 to 2011, climbing to record prices along with other precious metals.
  6. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI Turkey

    Learn about the iShares MSCI Turkey exchange-traded fund, which invests in a wide variety of companies' equities traded on Turkish exchanges.
  7. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  8. Mutual Funds & ETFs

    ETF Analysis: Guggenheim Enhanced Short Dur

    Find out about the Guggenheim Enhanced Short Duration ETF, and learn detailed information about this fund that focuses on fixed-income securities.
  9. Mutual Funds & ETFs

    ETF Analysis: iShares US Oil&Gas Explor&Prodtn

    Learn about the iShares U.S. Oil & Gas Exploration & Production ETF, which provides an efficient way to invest in the exploration and production sector.
  10. Mutual Funds & ETFs

    ETF Analysis: iShares Morningstar Small-Cap Value

    Find out about the Shares Morningstar Small-Cap Value ETF, and learn detailed information about this exchange-traded fund that focuses on small-cap equities.
RELATED TERMS
  1. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  2. Exchange-Traded Mutual Funds (ETMF)

    Investopedia explains the definition of exchange-traded mutual ...
  3. Lion economies

    A nickname given to Africa's growing economies.
  4. Factor Investing

    An investment strategy in which securities are chosen based on ...
  5. Reverse Gold ETF

    Exchange traded funds that are designed to trade in a direction ...
  6. Investment Fund

    A supply of capital belonging to numerous investors that is used ...
RELATED FAQS
  1. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>
  2. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
  3. What is the difference between passive and active asset management?

    Asset management utilizes two main investment strategies that can be used to generate returns: active asset management and ... Read Full Answer >>
  4. Is there a situation in which wash trading is legal?

    Wash trading, the intentional practice of manipulating a stock's activity level to deceive other investors, is not a legal ... Read Full Answer >>
  5. Are there leveraged ETFs that follow the retail sector?

    There are many exchange-traded funds (ETFs) that track the retail sector or elements of the retail sector, and some of those ... Read Full Answer >>
  6. What are some of the most popular ETFs that track the retail sector?

    Some of the most popular exchange-traded funds (ETFs) that track the retail sector include the iShares S&P Global Consumer ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!