Global Commodity Market Wrap-Up

Last week, commodities prices witnessed mixed sentiments. Gold prices maintained negative momentum and settled with a weekly loss of 4.10%. Moreover, Silver closed with a loss of 5.89%. Base metals also traded in a positive tone last week where Copper and Zinc prices witnessed a weekly gain of 0.49% and 3.70%; however, Lead prices settled with a weekly loss of 2.01%.

On the Energy front, Crude Oil prices gained sharply and settled at a weekly gain of 0.84%. Moreover, Natural Gas prices settled with a weekly gain of 1.74%. Meanwhile, agricultural commodities prices closed on a negative note.

In the current week also, most commodities are trading with a negative tone. The precious metals prices are trading in a negative direction. On the energy front, Crude Oil continued its bullish momentum from last week and is trading on a negative note; however, Natural Gas prices are trading with a positive tone. The agricultural commodities basket is trading in a positive tone.

The upcoming macroeconomic events that may impact market sentiments include an update on the US Non-Farm Employment Change, US Unemployment Claims, and US Unemployment Rate etc.

Having understood the global commodities performance over the past week, taking cues from major global economic events, and based on technical analysis, noted below is the recommendation with the generic insights, entry price, target prices, and stop-loss for Coffee C December Futures (ICE: KCZ3) for the next 1-2 weeks duration:

 Coffee C December Futures (ICE: KCZ3)

Price Action and Technical Indicator Analysis:

Coffee’s December Futures prices are trading above the horizontal trendline support level and taking support from the trendline on the downside, indicating the possibility of an upward movement hereon. The leading indicator RSI (14-period) is showing a reading of ~42.67, indicating positive price momentum. However, the prices are trading below the 21-period & 50-period SMAs, which may act as a resistance level.

Now the next crucial resistance levels appear to be at USc 157.00 and USc 161.70, and prices may test these levels in the coming sessions (1-2 weeks). 

As per the above-mentioned price action and technical indicators analysis, Coffee C December Futures (ICE: KCZ3) is looking technically well-placed for a ‘Buy’ rating. Investment decisions should be made depending on an individual’s appetite for upside potential, risks, and any previous holdings. This recommendation is purely based on technical analysis, and fundamental analysis has not been considered in this report. Technical summary of the ‘Buy’ recommendation is as follows:

Technical Analysis Update on Gold October Futures (COMEX:GCV3)

Price Action and Technical Indicator Analysis:

Gold’s October Futures prices are trading below the downward sloping trendline support level and facing resistance from the trendline on the downside, indicating the possibility of a downward movement hereon. The leading indicator RSI (14-period) is showing a reading of ~21.21, indicating negative price momentum. Moreover, the prices are trading below the 21-period & 50-period SMAs, which may act as a resistance level.

Technical Analysis Update on Platinum October Futures (NYMEX:PLV3)

Price Action and Technical Indicator Analysis:

Platinum’s October Futures prices are trading below the falling trendline resistance level and facing resistance from the trendline on the downside, indicating the possibility of a downward movement hereon. The leading indicator RSI (14-period) is showing a reading of ~35.54, indicating negative price momentum. Moreover, the prices are trading below the 21-period & 50-period SMAs, which may act as a resistance level.

Upcoming Major Global Economic Events

Market events occur on a day-to-day basis depending on the frequency of the data and generally include an update on employment, inflation, GDP, WASDE report, consumer sentiments, etc. Noted below are the upcoming week's major global economic events that could impact the commodities prices:

Futures Contract Specifications

Disclaimers 

Related Risks: Based on the technical analysis, the risks are defined as per risk-reward ratio (~0.80:1.00), however, returns are generated within 1-2 weeks’ time frame. This may be looked at by Individuals with sufficient risk appetite looking for returns within short investment duration. The investment recommendation provided in this report are solely based on technical parameters, and fundamental performance of the commodities has not been considered in the decision-making process. Other factors which could impact the commodity prices include market risks, regulatory risks, interest rates risk, currency risks, and social and political instability risks etc.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: Individuals can consider exiting from the commodity if the Target Price mentioned as per the Technical Analysis has been achieved and subject to the factors discussed above.

Note 3: How to Read the Charts?

The Green colour line reflects the 21-period moving average while the red line indicates the 50- period moving average. SMA helps to identify existing price trend. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the commodity. Commodity with high volumes is more liquid compared to the lesser ones. Liquidity in commodity helps in easier and faster execution of the order. 

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

Risk Reward Ratio: The risk reward ratio is the difference between an entry point to a stop loss and profit level. This report is based on ~80% Stop Loss of the Target 1 from the entry point.

The reference date for all price data, volumes, technical indicators, support, and resistance levels is October 04, 2023 (Chicago, IL, USA 1:50 AM (GMT-5). The reference data in this report has been partly sourced from REFINITIV. 

Note: Trading decisions require a thorough analysis by individuals. Technical reports, in general, chart out metrics that may be assessed by individuals before any commodity evaluation. The above are illustrative analytical factors used for evaluating the commodity; other parameters can be looked at along with additional risks per se.

Disclaimer

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