Breakout week sees copper, gold nearing new resistance Breakout week sees copper, gold nearing new resistance Breakout week sees copper, gold nearing new resistance

Breakout week sees copper, gold nearing new resistance

Commodities 6 minutes to read
Ole Hansen

Head of Commodity Strategy

Summary:  Gold has run into some mild profit-taking in the wake of Wednesday's FOMC minutes while copper prices are presently shrugging off trade war headlines and poor macro data in favour of a more bullish, supply-interruption focus.

On Monday, our Morning Call highlighted two breakout candidates in metals. Since then, both gold and copper have rallied higher to reach their next levels of resistance. What were the catalysts behind the latest moves higher?


After almost reaching $1,350/oz, gold has since run into some mild profit taking following yesterday’s Federal Open Market Committee minutes. While the FOMC members see 2019 marking the end of their balance sheet run-off, they did not signal an end to rate rises. The market, however, did not buy into this signal with CME’s FedWatch tool showing an 85.3% chance of no change this year.  

The image below highlights the key drivers for gold and their recent impact. While the December rally was driven by support from movements across most other asset classes, the rally so far this year has continued despite headwinds from the risk rallies in developed and emerging market stocks as well as high yield corporates.

The dollar has provided limited direction with the exception of the stronger yuan. Our next commodity webinar discussing current developments and the outlook for metals, energy and agriculture will be held on February 27. You can sign up here.
Gold and copper
We maintain a bullish outlook for gold given the prospect of a weaker dollar, stock markets having run ahead of themselves to the upside and bond yields telling us all is not well across some of the major economies.

A short-term correction could see the metal revisit and test support at $1,325/oz. The upside focus, meanwhile, remains the major band of resistance between $1,365 and $1,380/oz where gold has peaked out on several occasions since 2016.
Source: Saxo Bank
HG Copper

For many months now, supply worries have helped offset the headline risks associated with US-China trade war and weaker economic data. On Tuesday, Glencore joined other miners in flagging supply concerns from India, Peru and Africa. Adding to this, we have support from China where a stable to stronger yuan and looser credit conditions have boosted sentiment.

HG Copper has reached its first level of resistance at $2.93/lb ($6400/t on LME). Support now lies at $2.85 with the next target being $3.02/lb. The focus on supply has also helped copper buyers draw some inspiration from palladium, which despite slowing car sales has surged higher due to the prospect of demand outstripping supply over the coming year. 
Source: Saxo Bank
The latest (but still delayed) Commitments of Traders report from the US CFTC covering the week to January 29 showed a managed money short of 40,300 lots, not far from the June 2016 record of 47,100 lots. A 6% rally since then is likely to have attracted a significant amount of short-covering. Whether a long position has been established ahead of the price breakout this week, however, remains to be seen. The CFTC will not be up to date before March 8 when data covering the week to March 5 will be published. 

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (
- Analysis Disclaimer (
- Notification on Non-Independent Investment Research (

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.