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ICBC Trading Strategies of Precious Metals and Commodities Market - November 1, 2018

I. Precious Metals

Gold fell to a near three-week low on Wednesday as the dollar scaled a 16-month peak and a stock market rebound stirred renewed appetite for riskier investments. Spot gold was down 0.8 percent at $1,213 per ounce, having touched its lowest since Oct. 11 at $1,211.52. U.S. gold futures settled down $10.30, or 0.8 percent, at $1,215.

In the near term, gold is very much driven by the risk environment, the equity market performance and the strength of the dollar. The dollar index climbed to its highest level in 16 months while stock markets bounced after a brutal October.

On the technical front, gold poked over the 100-day moving average, seeking the support of the 50-day moving average at $1,210. The key mark of $1,200 shall be closely watched, as a new wave of decline would be triggered if the support is breached.


Silver fell 1.2 percent to $14.3 an ounce, hitting the lowest since October 10 at $14.2 during the session, in line with market expectations. The white metal is very likely to fall back to the key mark of $14 in the near term.

II. Commodities
Crude Oil

Oil prices fell on Wednesday and posted the worst monthly performance since mid-2016 on evidence of rising global crude supply, but losses were limited by signs of strong U.S. demand for fuel.

The Brent crude December futures contract, which expired Wednesday, fell 44 cents to settle at $75.47 a barrel. The more-active January contract fell 91 cents to settle at $75.04 a barrel. West Texas Intermediate (WTI) crude futures fell 87 cents to settle at $65.31 a barrel. Both benchmarks were more than $10 a barrel below the four-year highs reached on Oct. 3. They both posted their worst monthly performance since July 2016, with Brent falling 8.8 percent for the month and WTI dropping 10.9 percent.

The United States and other top producers Russia and Saudi Arabia pumped 33 million barrels per day in September, data showed, an increase of 10 million bpd since the start of the decade. In the near term, crude is expected to keep pulling back.


Bellwether copper closed down 0.7 percent at $5,992, after data showed China's manufacturing sector grew at its slowest pace since July 2016 and concerns lingered about excess Chinese supply.

The slowdown in Chinese factory growth in October coincides with escalating Sino-U.S. trade tensions that have raised fears over growth in the world's second largest economy and top metals consumer.

The dollar scaled 16-month highs against a currency basket on the back of further strong U.S. econmoic data, heading for its biggest monthly winning streak in more than three years. Copper is expected to be kept under pressure in the near term.


U.S. soybean futures turned higher on Wednesday after falling to a six-week low, boosted by technical buying. Chicago Board of Trade November soybeans were up 5-1/2 cents at $8.39. Earlier in the session, the front-month contract hit its lowest price since Sept. 20.

Uncertainty about demand continued to hang over the markets, as the trade row between Washington and Beijing has nearly halted U.S. soybean export sales to China, the world's top importer of the soybean.

Recent strength will not determine the long trend. Only cooling Sino-U.S. trade friction could provide upward momentum to soy prices.


Dealing Room, ICBC Beijing Branch
                        Cheng Yu