Global Commodity Market Wrap-Up

Last week, the metals market faced a downward trend. Gold showed some resilience, managing a slight increase of 0.32%, while silver saw a notable decline of 1.97%. Base metals also lost momentum, with copper falling by 1.63% and the lead decreasing by 2.82%. Zinc also experienced a loss, down by 0.36%. This shift from the previous week’s stability underscores a transition toward a more bearish market sentiment.

Last week, natural gas prices saw a significant decline of 7.78%, influenced by supply dynamics and seasonal trends. In contrast, crude oil prices rose by 1.59%, reflecting strong market confidence. Meanwhile, U.S. sugar prices in the agricultural sector fell by 3.35%, underscoring a bearish trend across agricultural commodities.

Global commodities have recently declined from their peaks, influenced by a range of global factors. Precious metals remain above key support levels, indicating a bullish trend. In the energy sector, natural gas displays neutral momentum, while crude oil prices are trading above critical support levels. In contrast, agricultural commodities are showing a mixed performance.

The upcoming Micro and Macroeconomic events that may impact market sentiments include an update on Core Retail Sales, Initial Jobless Claims, Retail Sales and Building Permits.

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 Nickel January Future (LME: CMNIF25) for the next 2-4 weeks duration:

 Nickel January Future (LME: CMNIF25)

Price Action and Technical Indicator Analysis:

In January, Nickel futures exhibited a corrective wave, indicating negative momentum. Technically, prices are positioned below a horizontal trend line and have formed a bearish candlestick pattern, suggesting a potential trend reversal. A significant bottom on the weekly charts reveals resistance levels. The Relative Strength Index (RSI) stands at 52.96, having declined from positive territory, which indicates ongoing weakness. Additionally, prices are currently above the 21-period Simple Moving Average (SMA), which may provide support in the short term.

Now the next crucial resistance levels appear to be at USD 17000.00 and USD 16700.00, and prices may test these levels in the coming sessions (2-4 weeks).

As per the above-mentioned price action and technical indicators analysis, Nickel January Future (LME: CMNIF25) is looking technically well-placed for a ‘Sell’ rating. Investment decisions should be made depending on an individual’s appetite for downside 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 ‘Sell’ recommendation is as follows:

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 a 2-4 weeks’ time frame. This may be looked at by Individuals with sufficient risk appetite looking for returns within short investment duration. The investment recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the commodities has not been considered in the decision-making process. Other factors which could impact 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 Selling 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 14, 2024 (Chicago, IL, USA 01:30 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.