The current bullish trend for copper shows no sign of slowing just yet with the red metal touching a 3 year high largely driven by increasing demand from China(FXI, quote), along with a fall in inventories in the London warehouses.
Gold has been undermined by rising government bond yields owing to major central banks generally turning more hawkish while the still-buoyant equity markets means there has been reduced demand for the perceived safe haven asset.
The Australian dollar went sideways and a very choppy session on Thursday, finding resistance just above the 0.76 handle.
The Australian dollar try to rally during the session on Tuesday, but found enough resistance above the turnaround for a bit of a shooting star.
Thanks to soft US economic data of late, expectations about an aggressive rate hiking cycle by the Fed has diminished.
The Australian dollar had an explosive session on Monday, initially gapping lower, filling the gap, and then continue the down move.
The dollar buying witnessed at the start of the week was driven by rising expectations about a June rate hike following last week’s FOMC statement and a solid US monthly jobs report.
Commodities price are firmer today with base and especially precious metals ending a bad run off losses, while crude oil has extended its gains from the day before when it rallied sharply on the back of the weekly US oil inventories report.
Whilst gold and silver have a relatively close relationship in terms of associated price action, in the last few weeks these relatively close bedfellows have diverged somewhat, with silver continuing the bearish sentiment initiated in mid April, whilst gold pauses and reflects, with neither metal appearing to benefit greatly from recent weakness in the US dollar (UUP, quote).
For gold traders and gold investors, the daily chart for the precious metal has delivered some simple and clear examples of the power of volume price analysis, and how it can help us not only identify reversals and turning points, but also help us to stay in a position – which is the hardest part of trading success, bar none.
