The US dollar continued to bounce back due to risk-off sentiment and profit taking activities before the Easter long weekend. As a result, commodity prices lowered across the board.
Oil prices sank after inventory data from U.S. Department of Energy showed a build of +9.36 million barrels for crude oil, much larger than the expected +2.48 million. This depressed prices further aftera similar number from the American Petroleum Institute yesterday. A few positive signs including shortfall in Cushing and gasoline inventories did not manage to deter bearish sentiment. Canadian dollar and Russian rubble were sold off accordingly. There is little hindrance on the downside from here toward a support area of 37.71-38.21.
Copper prices slid together with other metals on the back of stronger US dollar and losses in Asian equities. The Shanghai Composite, Hang Seng, ASX and Nikkei were in the red as growth concerns resurfaced and investors sold risk assets including commodities. Low liquidity before the holidays made matters worse. Nevertheless, a firm support level at 2.2035 may restrict the downside until next week.
Gold was the second worst performer among metals with a 1.1 percent loss, only second to iron ore which was down 3.7 percent. Gold prices traded near one-month low after a string of hawkish remarks from Federal Reserve members, the latest comments came from St Louis Fed President Bullard that a hike in April is possible. Optimistic statements from other Fed members: Lacker, Williams, Lockhart and Evans also raised market’s expectation for future rate hikes.
GOLD TECHNICAL ANALYSIS – Gold prices dropped well below the support trend line to approach a support area of 1191-1207.6. Downward momentum highlights weakness in gold prices, even as risk assets are posting losses. Investors should be cautious of a stagnation.
