Comodities Range as Oil has a Drop

The commodities have a habit of ranging slowly for a long period of time and then suddenly spring into action when everyone has been lulled into sleep. One of the reasons for this is that the commodities are not only affected by the strength of the currencies (especially the USD) but they are also affected by the risk sentiment that exist across the world. Their price is affected by risk, their supply and anything that can happen across the world that will affect their supply and demand. This is what makes them fascinating instruments to trade in.

Gold, like markets around the world, continued to trade in a tight range between their support at 1330 and their resistance at 1342. With the markets expected to range for some more period as we close in on the end of the month, we can safely expect the range to hold. As we write, it is now close to the bottom of the range at 1334 and we can expect 1330 to hold and the trading to be done with a bullish bias with a target of 1350. We do not expect any major movement in the price of Gold for this week and we expect the trading to be range bound.

The same can be expected for silver as well with its price also being held in a tight range on Friday. The bottom of the range comes in at 18.8 and the top comes in around 20.11 where we can expect a lot of sellers to be waiting. Again, with no major market movers this week, we can expect the price to be driven by flows more than news.

Oil was the biggest mover among the commodities as the Oil producers still could not come to a conclusion on whether they want to cut their produce to shore up the price or whether they would continue with the glut of supply. We were initially told that there would not be any cut and the price quickly dropped down to 44.5 and then they rebounded back above 45 as they finally seemed to agree that they would be discuss about the production cut during the OPEC. This rebounded the price back above 45 and we expect the Oil price to move towards 46 as the Oil producers come to a conclusion on the specifics of the cut. The upmove should be capped by the resistance at 46.4.