Commodity Wrap - Gold, Copper, Oil, Soybean (24.08.2021)

Gold

• Gold price gained over $100 per ounce over the past 2 weeks and broke above the $1,800 mark as well as 50-session moving average

• Goldman Sachs claims that a much weaker USD and rebound on Asian markets would be required for gold to extend gains

• The latest forecast from Goldman Sachs point to $2,000 per ounce at the end of 2021

• Future moves on the gold market will depend on the direction Fed takes after Jackson Hole meeting. Increased risk of the fourth wave of coronavirus pandemic suggests that policy may remain loose for some time

• Gold price at $2,000 would require EURUSD to climb towards the 1.20 area at least

• Interestingly, in spite of decreased upward pressure on USD and increase in yields, ETF are selling out gold holdings in the past few days. Net speculative positioning increased

ETFs are selling out gold holdings. However, net speculative positioning on gold futures rebounded. Source: Bloomberg

If the gold price manages to hold above $1,800 per ounce and the 50-session moving average, the next target for bulls will be $1,833 area. Large divergence between gold price moves and EURUSD remains. Source: xStation5

Copper

• Copper reduces risk of realizing a technical head and shoulders pattern - price tries to climb back above the neckline

• Aluminium trades near multi-year highs - it suggests that copper may be currently oversold

• There are hopes that Chinese authorities will support some sectors of the economy, with infrastructure, real estate and production being main targets. This may provide support for industrial metal prices

Levels of copper inventories around the world begin to stabilize (yellow line). Inventories in China continue to fall (green line, inverted axis). Source: Bloomberg

Copper price tries to climb back above the neckline of head and shoulders pattern. Should it succeed, it may be able to "catch up" with other industrial metals, like aluminium. Source: xStation5

Oil

• Oil has been oversold on the back of two factors - expected weaker demand from China, what was confirmed by lower imports in recent months

• The second factor was strong US dollar on the back of expectations of hawkish shift from the Fed

• Both of these drivers started to fade recently

• Mobility data from China shows an increase in activity, what in spite of new restrictions may lead to demand recovery

• Brent recovered all of last week's loss during the past two session and is approaching $70 per barrel area

• UBS expects Brent to reach $75 by the end of this year

• Oil inventories began to fall once again. Seasonal low is expected in mid-September

Oil inventories dropped once again but a seasonal low should be reached in mid-September. Source: Bloomberg

Brent (OIL) recovered almost all of the losses from last week. Seasonal patterns point to a potential rebound in the first week of September and another one in mid-October. Source: xStation5

Soybean

• Recent weaker forecasts for Asian markets boosted uncertainty relating US exports

• Weakness of the Brazilian real also boosts competitiveness of South American crop

• Additionally, awaited rainfall in the corn and soybean production regions improves outlook for this year's production (harvest starts in a few weeks)

• Soybean and corn have been strongly oversold after EPA (US Environmental Protection Agency) recommended lower biofuel content in fuel mix

• In spite of recent rainfall, data from the United States showed deterioration in quality of soybean and corn crop

Seasonal patterns suggest that a low in soybean prices may be approaching. A new corn and soybean selling season begins in September and China continues to show strong demand. Source: Bloomberg