COMEX INSIGHTS 13-JULY-2018

July 12, 2018

GOLD:

 

  • In last week’s Gold Technical Outlook, prices had responded to critical support at 1236/39- a region, “defined by the 78.6% retracement of the December lows & the 78.6% retracement and converges on basic uptrend support extending off the late 2016-low as well as the median-line of the descending pitchfork formation we’ve been tracking since the April high.”

  • Price failed to close above the monthly opening range highs early in the week with the subsequent pullback once again eyeing the yearly lows.

  • Bottom line: Gold has responded to key weekly support and the immediate focus is on the June opening range with the broader downtrend at risk near-term while above 1236. From a trading standpoint, we’re on the lookout for a low / long-entries while above 1239.

CRUDE OIL:

 

  • Crude Oil is a naturally occurring liquid fossil fuel resulting from plants and animals buried underground and exposed to extreme heat and pressure. Crude oil is one of the most demanded commodities and prices have significantly increased in recent times.

  • The US crude oil price is more stable Thursday after news of a huge draw in US oil inventories.

  • That suggests Wednesday’s tumble on news that Libya is reopening four oil export terminals was overdone.

  • The recovery was prompted by a report from the US Energy Information Administration that US crude oil inventories fell by 12.6 million barrels in the week to July 6, almost three times the drop expected.

  • Bottom Line: Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger US crude oil bearish contrarian trading bias.

OTHERS:

  • Copper

    • Copper fell by over 58% between February 2011 and January 2016.
       

    • By late-2017 it looked like the commodity was finally out of the woods as the price rose to almost $3.30.
       

    • According to the news, the sharp decline is caused by the trade war between the United States and China.
       

  • Soybean:
     

     

    • By the summer of 2012, top quality Iowa farmland that traded hands for about $4000 an acre in 2006 soared past $15,000 while farm income more than doubled from 2006 to 2013.

    • In 2017, China took in 57% of US soybean exports. Early this year, the USDA estimated that within a decade, China would absorb 70% of US soybean exports

    • Accumulated exports of US soybeans to China for the marketing year have fallen 27 million metric tons, 20.5% less than this time last year.

    • U.S. soybean prices have now fallen from about $10.50 per bushel in late May to $8.60 as of last Friday’s close.

    • Call the U.S. farmer, and Illinois and Iowa in particular, collateral damage in what is now becoming a broader trade battle

    • Next, tariffs will begin to stifle U.S. economic growth as the price of affected goods begins to bite into household paychecks.
       

  • Iron Ore:

     

     

    • The collapse of iron ore prices in the face of oversupply has been threatened for the last few years.
       

    • Following massive investments in Australia and Brazil, oversupply was expected to hit dwindling demand on the back of a cooling Chinese property market and an environmental crackdown on excess steel production.
       

    • Yet despite repeated dire warnings, prices have, if anything, gone the other way, rising to over $67 per ton during May and only falling back during the following month.
       

    • Finally, it seems gravity is reasserting itself and prices are beginning to ease.

 

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