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ICBC Trading Strategies of Precious Metals and Commodities Market - November 30, 2018

I. Precious Metal Market
Gold price remained steady, but erased its gains earlier on Thursday as the dollar rebounded and the latest minutes of the Federal Reserve’s meeting showed that the interest rate hike in December was imminent. Spot gold was 0.2% higher at USD1,223.75 per ounce, after hitting a record high of USD1,228.96 per ounce since November 22. U.S. gold futures closed flat at USD1,224.10 per ounce. The minutes of the Federal Reserve’s meetings in November 7-8 showed that almost all policymakers agreed at the last policy meeting that “it may be necessary soon” to raise interest rates again, but opinions diverged on when to stop further interest rate hikes and how to communicate these plans to the public. Investors are now paying close attention to the U.S.-China leaders’ meeting to be held during the G20 summit in Argentina. In the short term, the meeting will have an impact on the gold price. However, in the medium term, the gold price will still be consolidated in a range between USD1,200/ounce-USD1,250/ounce.
Spot silver held steady at USD14.31 per ounce. The hesitation of silver price yesterday and the inverted V-shape of gold price reflected the current weakness of the precious metals. The previous view remained unchanged. That is, “although the silver price rose yesterday, the daily K line was still below the 50-day moving average, and the 5, 10, and 20-day moving averages were staggered, implying the currently sharp rebound was unlikely. The silver price is expected to be consolidated around the 50-day moving average, and attention should be also paid to the breakthrough line below USD14 per ounce.”

II. Commodity Market
Crude oil
Oil prices reversed on Thursday, rising as much as 2%. Earlier, industry sources said that Russia agreed to cut production before the meeting next week with the OPEC. Since November, oil price have fallen by nearly 22%, the largest monthly decline since the worst of the 2008 financial crisis. Two industry sources said that Russia is increasingly convinced of the need to jointly cut production with the OPEC, but is still negotiating with OPEC leader Saudi Arabia on the timing and volume of production cuts. The oil price subsequently rebounded. Brent crude oil settled up USD0.75, or 1.3%, at USD59.51 per barrel, with the intraday high at USD60.37 per barrel. U.S. crude oil traded USD1.16 or 2.3% higher at USD51.45 per barrel, with the daily high of USD52.20 per barrel. Investors are looking forward to the meetings of the G20 leaders on November 30 and December 1, and the U.S.-China trade war will be the focus of attention.
London Metal Exchange (LME) copper continued its gains on Thursday as investors speculated that the U.S. interest rates might be close to peak, which stimulated the purchase of riskier assets. However, the transactions were thin before China’s release of its economic data and the G20 summit. Three-month copper on the London Metal Exchange closed 0.2% higher at USD6,212 per ton, up 1.3% over the previous trading day. The data to be released by China on Friday is expected to show that China’s manufacturing industry is unlikely to achieve its second consecutive month of growth in November. China’s official manufacturing purchasing managers’ index (PMI) is expected to reach 50.2, slightly above the neutral level of 50. But if it fell below 50, it would cause another blow to market sentiment.
CBOT soybean futures closed lower on Thursday. Traders said that before the expected U.S.-China trade negotiations during the G20 summit later this week, there’s some position-squaring on the market. Given that China is the world’s largest soybean importer, soybean traders are waiting for any signs of a thaw in China-U.S. trade relations. CBOT-1 soybean futures closed down 3-1/4 cents at USD8.87-1/4 per bushel, staying within yesterday’s trading range. CBOT-December soybean meal futures closed down USD1 at USD306.90 per ton. Soybean oil futures for December delivery settled 0.05 cents lower at 27.68 cents per pound. The U.S. Department of Agriculture reported that the U.S. exported 628,800 tons of soybeans in the past week, in line with market estimates of 400,000-900,000 tons.


Trading Office of Beijing Branch
Huang Han
November 30, 2018