When the Federal Reserve started tightening its cycle, the US Dollar remains strong as it continues to cap the prices of commodities. The Caixin Manufacturing Purchasing Index of 48.2 reflects the end of the commodity boom, as well as China’s moving away from the manufacturing industry. Later in the week, the investors will be looking at the US Non-Farm Payrolls Data in December 2015.
2015 was another year of double-digit declines in crude oil and other refined products because of the consistent excessive supply. The narrowing of Brent WTI spread was a notable development during the last part of December 2015 as it closed the year at about 24 cents. According to experts, this may last up to the first few weeks of this new year as the excessive supplies of Brent barrels are on their way to various storage facilities in the US because of shortages in some areas.
The oil minister of Venezuela suggested a meeting with oil producers in January for a short-lived upside volatility. Meanwhile, gasoline and heating oil closed the year being down 12% and 40% respectively.
In China, on the other hand, there is a slow growth of the prices of industrial metals, thereby cutting the costs of supplies. Last December, the Caixin PMI of China came at 48.2, which is lower than the predicted 49 and 48.6 in November last year. With stagnant demands in early 2016, the collapse of prices of copper and metal may continue while there is restructuring.
After almost 6 years, gold price still remain vulnerable. Global data and the projected rate hikes may affect gold early this year. Bullion, on the other hand, might be granted reprieve in the later part of this year as the market absorbs the interest rates between G10 countries and the US.
Technical Analysis for Gold
As the Fed predicted a rate hike last year, Gold has remained within the range since mid-November 2015. As the process of absorption goes on this year, the 1046-1088 range may likely remain the same. Moving averages are flat; however, there might be a short-term pickup based on the momentum signals. In conclusion, the bullion still doesn’t have its own momentum; hence, it is likely to move according to the sentiments of the broader global market.
Technical Analysis for Copper
The short-term pickup of the prices of copper late in 2015 may have been exhausted as the momentum signals a downturn. Nonetheless, the range of copper is almost the same as other commodities. There are 2.000 support level and 2.2080 resistance levels. Although there is thin liquidity in the first few weeks of 2016, it is likely that it will remain with low volatility.
Technical Analysis for Crude Oil
Even though the oil price of WTI oil increased to more than $35 late last month, it is still vulnerable to a number of risks in the coming weeks. Currently, the signals show range trading below he $40 mark. Before choosing sides, long-term investors are waiting for the sentiments of the market.