Commodities: Weekly movers & shakers - TDS

Analysts at TDS explain that a weak US dollar and flat yield curve have seen prices rally and gold liquidations come to an end in 2018.

Key Quotes

“After breaking above the $1,300/oz mark, traders have been keeping an eye on the 2017 high of $1,357/oz and will be looking to the latest round of economic data to gauge inflation and Fed expectations before taking the yellow metal to those levels again.”

“The data precious metals traders will be watching this week will be the CPI, PPI and retail sales in the US, along with the release of the ECB minutes. With no rate hike expected until March, these data releases in the lead-up will be important, as a noticeable improvement in the inflation outlook would likely be needed to justify pulling the trigger again. A failure to see any real pickup in the data could well be the needed catalyst to test the 2017 highs.”

“Meanwhile, base metal traders will pay particular attention to the Chinese monthly trade data, along with the aggregate financing print. Considering that China's commodity appetite has remained buoyant of late, which has eased concerns that the deleveraging effort may impact growth prospects for raw material demand, this month's trade and financing data will provide valuable insights into demand growth from the world's top consumer.”

“In energy markets, traders will focus on the weekly inventory report, and specifically data on refinery runs, inventories and production. Refinery demand remained at extremely high levels recently, leading to heavy crude draws and product builds, but refineries typically enter into maintenance during January, which could see builds in crude inventories. The market will be watching whether we will follow this seasonal trend, or if strong demand and OPEC cuts continue to see inventories drain, supporting this higher price environment.”

“In addition to the weekly inventory and rigs reports, the DOE will be releasing their short term outlook, while President Trump is set to make a decision on signing a series of waivers, renewed every 120 days, in relation to the Iran nuclear deal. Trump's decision will also be on the radars amid current protests against the Iranian government.”

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