Brent crude oil and copper stabilize while gold loses upside momentum

Brent crude oil recovers from its 15-month low

Brent crude oil seems to have, at least temporarily, bottomed out, in line with global sentiment which recovered after Monday morning’s sharp sell-off in bank shares before these mostly regained their intraday losses and as strong demand from top crude importer China kept a floor under prices.

On the daily chart, the front month Brent crude oil futures contract formed a potentially bullish ‘Hammer’ on the daily candlestick chart, having also bounced off the 200-week simple moving average (SMA) at $70.09.

A rise and daily chart close above Monday’s $73.70 high would lead to the December low and Friday’s high at $75.32 to $75.70 being back in focus. This area is expected to cap on the first test, however.

Slips should find support at last week’s $71.65 to $71.39 lows ahead of Monday’s $70.09 trough.

Strong gold rally loses upside momentum

Gold’s two-week over 10% rally on global risk-off sentiment and flight-to-quality flows out of equities and into the precious metal is likely to run out of steam ahead of Wednesday’s widely awaited Federal Reserve (Fed) FOMC meeting in which it is expected to raise the fed funds rates by 25-basis points to 4.75% to 5.00%.

Monday’s spike to $2,009 per troy ounce, to levels last traded in March 2022, is expected to be followed by a retest of Monday’s low at $1,966 with the February peak at $1,959 representing the next downside target, together with the $1,949 late January high.

Were further upside to be witnessed, however, Friday’s high at $1,989 may act as resistance ahead of the psychological $2,000 mark and Monday’s peak at $2,009.

Copper is trying to level out ahead of Wednesday’s Fed rate decision

The two-month long slide in the price of copper has taken it to last week’s $8,443 per ton low, around 11% below its $9,951 mid-January peak, amid global recession fears triggered by the banking crisis.

Short-term, the price of copper is seen to regain some of its lost ground as risk-off sentiment abates ahead of Wednesday’s FOMC meeting with the early to mid-February lows at $8,787 to $8,809 representing possible minor resistance.

Only a rise and daily chart close above the next higher January-to-March downtrend line, 55-day simple moving average (SMA) and last week’s high at $8,940 to $8,972 would indicate that the medium-term bullish trend has resumed.

Since last week’s low at $8,443 has been accompanied by positive divergence on the daily Relative Strength Index (RSI), it is likely that further upside is to be seen in the days to come.

Immediate support sits at the 13 March low at $8,638, followed by last week’s low at $8,443.