I. Precious Metals Gold Gold gave back most of its losses on Wednesday as the dollar pared gains and bullion shrugged off earlier pressure from U.S. Federal Reserve officials' comments that raised expectations of an interest rate hike in March. The Federal Reserve is setting the stage for a U.S. interest-rate increase later this month, with another policymaker Wednesday making the case that economic strength at home and stability abroad have created a window for action. We should begin the process sooner so we can ensure that it is gradual and patient," Dallas Fed President Robert Kaplan, a voting member this year on the Fed's policy committee, said. The comments were the latest in a period with an unusually high concentration of Fed speeches, with four out of five Federal Reserve Governors - including Chair Janet Yellen - speaking this week ahead of the March 14-15 rate meeting. New internal Fed rules on public communications make Friday the last chance to set up market expectations before the next Fed meeting. President Donald Trump told Congress on Tuesday he opened the door on Tuesday to a broad overhaul of the U.S. immigration system, a shift from his hardline campaign rhetoric. He emphasized his desire to focus on problems at home by boosting the U.S. economy with tax reform, a $1 trillion infrastructure effort and an overhaul of President Barack Obama's signature healthcare law, known as Obamacare. On technical front, gold’s upward momentum remained intact, with its daily chart holding above the 20-day moving average and weekly chart supported by the 200-week moving average. But resistance can be found at the 200-day and 50-week moving average. The MACD index shows retaining steam for a breakthrough. Investors shall be cautious ahead of Fed’s policy meeting in March.
Silver Silver rose 0.6 percent to $18.40 per ounce, outperforming gold and keeping climbing along the upper band of Bollinger path. Currently, the 20-day moving average is about to cross over the 200-day moving average, while the 50-day moving average move up sharply, adding the likelihood to rise further to $18.8. But the white metal is expected to meet heavy downside pressure at the level, requiring technical support for extending its gains.
II. Commodities Crude Oil Oil prices ended slightly lower on Wednesday as record high U.S. crude supplies tempered expectations that the market will rebalance as evidence emerges that OPEC producers are complying with an agreement to cut production. Crude stockpiles in the United States, the world's top oil consumer, rose 1.5 million barrels last week, less than forecast, but touching a record at 520.2 million barrels after eight straight weekly builds. The consecutive increases have fueled worries that demand growth may not be sufficient to soak up the global oil glut despite a deal by major oil producers to cut output during the first half of the year. U.S. West Texas Intermediate (WTI) futures for April delivery settled at $53.83 a barrel, down 0.3 percent. May Brent crude futures dropped 0.3 percent, to $56.36 a barrel. With refineries coming back into service, U.S. crude supplies growth is expected to continue. A survey showed the Organization of the Petroleum Exporting Countries cut its output by 300,000 barrels per day from the revised level in January, showing the exporter group has boosted already strong compliance to around 94 percent from January’s 82 percent.
Copper London copper climbed on Wednesday to its highest in nearly one week, supported by an upturn in manufacturing growth in top metals user China. Shanghai Futures Exchange copper rose 1.7 percent to 48,650 yuan ($7,073) a tonne. Three-month copper on the London Metal Exchange had climbed 0.8 percent to $6,019 at 0734 GMT, adding to gains of 0.7 percent from the previous session and striking its highest since Feb. 23 at $6,033 a tonne. The official and Caixin Purchasing Managers' Index (PMI) rebounded sharply in February, confirming that China’s manufacturing sector, shrugging off the disruption of the Spring Festival, is gaining momentum, and boding well for an acceleration in China’s economic recovery. The official PMI rose to a three-month high of 51.6 in February, compared with analysts forecast of 51.1, and above the 50-point mark that separates growth from contraction for seven consecutive week. The official non-manufacturing PMI stood at 54.2 in February, down from 54.6 in January. The Caixin/Markit PMI rose to 51.7 with a robust new export orders .
Soybean Soybeans closed higher on Wednesday, boosted by soyoil futures in anticipation of stronger demand for biofuel with soybean as raw material. Uncertainty over changes in U.S. biofuel regulations, and possible tax break on U.S. biofuel regulations by the Trump administration lifted demand for soyoil. Chicago Board of Trade May soybeans rose 16 cents at $10.51-3/4 a bushel. May soyoil gained 0.81 cents to 34.74 cents, after hitting 33.78 cents, the highest since Feb. 13. May soymeal also edged up $2.9 to $339.3 a tonne, but still underperformed soybean and soyoil. Traded volumes of soybean, soymeal and soyoil were expected to stood at 164,320 lots, 61,563 lots, and 128,439 lots respectively.
Dealing Room, ICBC Beijing Branch Lv Yan
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