Commodities: Metals, crude trade sideways with gold facing resistance around $1231/oz

Andrew Schonberg Sharecast | 17 Mar, 2017 16:01 | | |

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Commodities futures traded broadly sideways with mildly positive biases on Friday, as gold struggled to bust through resistance at the $1,231 per ounce level after its Federal Reserve rate hike-inspired dash higher on Thursday.

At 15:14 GMT, on Comex, gold was up 0.18% to $1229.30 an ounce, with silver up 0.12% to $17.35 an ounce and copper ahead 0.5% to 269.10 cents a pound.

Three-month industrial metals on London Metals Exchange were all firmer. Tin led, followed by copper, zinc and then aluminum.

Accendo Markets research analyst Henry Croft said the safe-haven yellow metal was "struggling to overcome $1,231" as it looked to continue its Fed-inspired rally to fresh March highs.

Although the nil-yielding metal had bounced above $1230 its traction was relatively short-lived.

FXTM research analyst Lukman Otunuga said that with sentiment towards the US economy firmly bullish, the dollar remained supported, consequently capping gains on gold in the medium to longer term.

"From a technical standpoint, although prices are turning bullish on the daily charts, the $1240 regions (for gold) could act as a checkpoint for bears to attack prices lower.

Oanda senior market analyst Craig Erlam added that gold remained vulnerable to more downside.

"Political risk appeared to be feeding the safe haven appeal of the yellow metal last month but with the first (Netherlands ballot) of three election hurdles (the others being Italy and France) overcome in Europe this year, this appears to have subsided a little," he said.

Meanwhile, on the energy front, Nymex-priced WTI crude was up 0.18% to $48.84 a barrel, and Intercontinental Exchange-traded Brent was up 0.14% to $51.81 a barrel.

Erlam commented that Brent appeared to have found support around $50 this week, while WTI seemed to be having difficulty breaking through resistance at that same level.

"The price action over the last few days doesn’t look particularly bullish for oil and I do wonder whether the $50 level in Brent is on borrowed time," he said.

Otunuga continued that the rapidly diminishing optimism over the Opec production cut deal had heavily dented buying sentiment towards the black liquid.

"Although US crude stockpiles have eased from record levels last week, concerns still remain elevated over the high global inventories," said Otunuga.

"With concerns lingering over the compliance of some Opec and non-Opec members to cutting production, the upside on oil seems limited."

Otunuga opined that, from a technical viewpoint, WTI was heavily bearish on the daily charts. "Bears remain in firm control below $50," he concluded.

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