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What to expect in Commodity World ahead of the G20

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Barry Dumas
Commodity-Research-notes-trading (003)

Commodities have hit the pause button ahead of the G20 summit in Osaka Japan as a new round of tariff threats between the U.S and China make the rounds.

Gold

Has Gold lost its lustre? The precious metal has been the focal point of late due to the extraordinary gains over the last month as global economic meltdown fears progressed. A weaker U.S Dollar (USD) also added to the yellow metals gains which seems to be on the back foot ahead of the G20 summit.

The direction Gold (XAU) might head into depends on the outcome of the meeting between U.S President Donald Trump and Chinese President Xi Jinping at the G20 Summit. If all goes well and some sort of truths can be agreed upon we might expect the equity market to pick up as investors get out of safe havens like Gold.

Some technical points to look out for on Gold (XAU):

  • The price action in Gold (XAU) might find support at the 1392 level as the market awaits the outcome of the G20 summit.
  • A possible breakdown of support would target lower levels at the $1358/ ounce as investors move out of safe havens (as shown with white arrow) and into Equity.
  • If all goes south and global fears persist then we might expect the price action to target higher levels back to the $1440/ ounce.

XAU GT247 Bloomberg-1Source - Bloomberg

Crude Oil

Is Crude Oil back on the path of recovery? Well by looking beyond the OPEC supply cut story which seems to be taking effect as Crude Inventories dropped by over 12 million barrels, the biggest drop in Crude stockpiles since 2016. The focal point will be on the Middle East once more as U.S sanctions on Iran have also contributed to the rise in Crude over the last couple of weeks.

Key factors to lookout for which might just dictate the path of Oil is that Iran is set to breach its 2015 nuclear deal imposed by a group of world powers (P5+1) for the first time by this weekend.

  • At this stage the Middle Eastern country is still short of the maximum amount of enriched uranium it can have under its deal with the group of world powers.

Some technical points to look out for on Brent Crude Oil:

  • Brent Crude has moved higher as discussed in our previous commodity outlook and might find support at the $64.16/ barrel price level.
  • The 50-day Simple Moving Average (SMA) (white line) is currently acting as resistance which will be watched closely over the coming days.
  • The Relative Strength Index (RSI) has some way to go to reach overbought level and is pretty much neutral at this stage.

CO1 Comdty GT247 Bloomberg-1Source - Bloomberg


Disclaimer:

Any opinions, news, research, reports, analyses, prices, or other information contained within this research is provided by Barry Dumas, Market Analyst at GT247 (Pty) Ltd t/a GT247.com (“GT247.com”) as general market commentary, and does not constitute investment advice for the purposes of the Financial Advisory and Intermediary Services Act, 2002. GT247.com does not warrant the correctness, accuracy, timeliness, reliability or completeness of any information which we receive from third party data providers. You must rely solely upon your own judgment in all aspects of your trading decisions and all trades are made at your own risk. GT247.com and any of its employees will not accept any liability for any direct or indirect loss or damage, including without limitation, any loss of profit, which may arise directly or indirectly from use of or reliance on the market commentary. The content contained within is subject to change at any time without notice.

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