Commodities: Gold a snip ahead as markets look to Trump soapbox before Congress
By Andrew Schonberg
Date: Monday 27 Feb 2017
(ShareCast News) - Gold futures are a snip higher and sitting just below resistance as global markets anticipate US President Donald Trump's soapbox address to Congress on Tuesday, and also mull potential US Federal Reserve interest rate hikes this year.
At about 17:25 GMT, on Comex, gold was up 0.02% to $1258.6 an ounce, with silver up 0.16% to $18.44 an ounce and copper down 0.69% to 267.75 cents a pound.
Mike van Dulken and Henry Croft, both analysts at Accendo Markets, opined that, before bullish flag patterns to $1280 could be completed, gold would need to overcome its 200-day moving average at $1260 an ounce.
This was in light of trade on Friday last week that saw the safe-haven metal close at its highest level since the US election in November, as a weak dollar and rising European geopolitical uncertainty saw investors increase their exposure to the asset.
"An eagerly awaited address to congress by President Trump in the early hours of Tuesday could shed light on US fiscal policy, impacting the greenback," the pair added in a note.
Naeem Aslam, chief market analyst at Think Markets UK Ltd, added that if the Fed upped the key interest rate in March, "we may see a large downside move" in the price of nil-yielding gold.
"However, this does not mean that the gold price is going to fall off the cliff," he added, commenting that the uncertain European political scene and Trump's reflation trade were also factors.
"So we do not expect the gold price to fall below the $1150 mark," said Aslam. "If the Fed does not increase the interest rate then we could see the price touching the level of $1350."
Meantime, three-month industrial metals on London Metals Exchange were higher. Tin was the biggest gainer at 1.97%, followed by zine up 1.4%, copper up 1.18% and aluminum up 0.96%.
Nymex-priced West Texas Intermediate crude was up 0.46% to $54.24 a barrel, and Intercontinental Exchange-traded Brent was up 0.66% to 56.36 a barrel.
"Crude Oil prices have rallied in Asian trading hours as continuing reports of bullish positioning from institutional investors buoys wider market sentiment," said van Dulken and Croft.
"Both Brent and US crude remain someway off last week's highs of $57.30 and $55 respectively, however continuing OPEC compliance reports could help this week's early rally."
Oanda senior market analyst Craig Erlam noted that in a relatively quiet session oil was again pushing higher and threatening to bust above its near-two month trading range.
"The line in the sand continues to be $55 in WTI and $57.50 in Brent, with a break above these bringing $57 and $59, respectively, into focus," said Erlam.
"Momentum still appears to be with the bulls, despite the inability over the last week to break down the resistance after numerous attempts."
Among agriculturals, Chicago Board of Trade-priced corn was down 0.2% to 370 cents a bushel, with wheat off 0.84% to 444.25 cents a bushel.
On ICE, cocoa was down 0.8% to $1978 a MT, with cotton No.2 up 0.73% to 77.13 ents a pound. Live cattle rose 0.7% to 115.75 cents a pound.
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