Geopolitical risk and weak dollar support commodities

The energy and metals sector saw a strong week that helped propel the Bloomberg Commodity Index to its best week in six weeks. The renewed dollar weakness has provided some overall support, while rebalancing and fears about new US sanctions against Iran have helped boost oil prices.

Gold prices were supported by weak inflation data and the Federal Reserve's positive outlook, while industrial metal prices rose significantly as Beijing continued to curb supply to reduce pollution ahead of the Nineteenth National Congress of the Communist Party of China (CPC) and winter solutions.

Geopolitical risks continued their role in boosting support for oil and precious metals prices against the backdrop of US President Trump's wars against any lawmakers in Congress, the media, his administration and North Korea.

The most likely possibility in Trump's speech on Friday was to reject ratification of Iran's compliance with the nuclear deal.

Starting Wednesday, next week, Beijing is on the threshold of one of the most important events of the year, namely the Nineteenth Session of the National Congress of the Communist Party of China (CPC), the forum where Communist Party leaders are appointed and economic priorities set for the future.

Beijing's ambitious plan to highlight the problem of pollution in major cities to control and reduce it could elevate China's position among world leaders in battery technology and electric motors as well as pollution control itself.

In addition to production constraints, ambitious future goals for the production of electric vehicles have played an important role in supporting the recent rise in the prices of industrial goods, not least copper (electric wires), nickel (batteries) and aluminum (lighter cars).

The grain sector remained stable, with soybeans reaching a two-and-a-half month high as the US Department of Agriculture's monthly supply and demand report reduced crop and production estimates. Similar data for wheat and maize were less supportive, but they managed to recover and reach their lowest levels.

This comes in line with the trend of hedge funds to cover short positions in the belief that prices have reached a suitable level at this stage.

Hedge fund positions in the week ending Oct. 3 showed short-term net selling of wheat and maize, and net long-term purchase of soybeans.

However, the identification of the three main grain centers remained below the longer-term average due to abundant supply. Despite the net sell-off reaching a new low, short-term net selling of corn was 143,201 lott; only 69% from a one-year peak, a potential indicator of a sell-off.

The dollar's weakness and falling bond yields came back to save gold. After reaching and maintaining a key technical support level last week, gold managed to form a bullish hammer on the weekly chart.

Again, President Trump's popularity plummeted further in the wake of the wars he waged against lawmakers in Congress, and the increased risks associated with North Korea (both militarily) and Iran (sanctions).

After unexpectedly positive official records for the FOMC meeting in September and weaker-than-expected inflation data, gold prices rose to above $ 1300 an ounce. The US Federal Reserve released realistic inflation expectations in conjunction with its attempts to answer why there were no price pressures on the labor market.

These records concluded that the Federal Reserve is not in a hurry to raise its usual rate of interest rate hikes. The market has now allocated a 73% chance to raise interest rates on 13 December.

Paper investments across the funds traded on the exchange remained strong during the last correction phase. Hedge funds have tended to lower futures bets on price hikes by about 30 percent in the past three weeks, reducing the risk of additional pressure on the market from long-term liquidation.

Gold recovered after supporting at $ 1.260 an ounce, turning into more than a weak correction on the downside, we now need to see support above $ 1.298 an ounce .