Wednesday, 11 December 2013

Gold, Silver, Copper, Crude: Comodity Technical Outlook

Silver moved higher overnight to open at 20.32/20.37. It briefly dropped to a low of 20.23/20.28 and quickly followed gold to a high of 20.42/20.47 prior to concluding the day at 20.31/20.36.
Silver also closed higher at 20.36, moving above resistance at 19.85, which was the 76.4% retracement of the June to August uptrend. Resistance is at 20.85, the 61.8% retracement level. Support lies at the recent low at 18.90. As mentioned yesterday, MACD has generated a buy signal. This shifts the bearish short-term outlook to neutral.
The gold-silver ratio is trading lower at current 61.99 for the 5th session in a row. It has now breached support in the 62.28 area, the 50% retracement of the July – August range. The next support is at 61.06, the 38.2% retracement area. The ratio still remains in an uptrend off the August 28th low, with uptrend support currently coming in at 59.94.
Silver prices rallied as a broadly weaker U.S. dollar boosted the appeal of the precious metals.
Dallas President Richard Fisher said that rising long-term U.S. Treasury yields suggest that investors are expecting a reduction in stimulus.
Holdings at ishares silver trust dropped by 95.83 tonnes to 10208.66 tonnes from 10304.49 tonnes.

Gold moved higher overnight as the dollar eased to open at 1257.50/1258.50, which was also the low of the day. It moved to a three-week high of 1267.50/1268.50 following technical buying as well as short-covering by funds ahead of the FOMC meeting starting next week. Thereafter, the metal dropped marginally to close at 1261.00/1262.00.
Gold had a very strong close today, breaching resistance in the 1258 area to close at 1261. This shifts the short-term outlook from bearish to neutral. MACD has generated a buy signal (as highlighted yesterday), and RSI is turning higher. The next resistance is at 1277, the 61.8% retracement of the June to August uptrend. Support is at the recent low of 1210.
Gold rose boosted by technical buying and funds’ short-covering in thin trade ahead of the Federal Reserve’s December policy meeting
Federal Reserve officials gave fresh warnings about a potential stimulus reduction on Monday.
St. Louis Fed Bank President James Bullard said tapering will become increasingly likely as long as the labor market continues to improve.

On the Comex division of the New York Mercantile Exchange, copper futures for March delivery traded at USD3.261 a pound during European morning trade, up 0.1%. Comex copper prices rose to a session high of USD3.264 a pound earlier, the strongest level since November 24.
The March contract settled 0.29% higher on Monday to end at USD3.258 a pound.
Copper prices were likely to find support at USD3.231 a pound, the low from December 9 and resistance at USD3.270 a pound, the high from November 24.
Industrial production in China rose 10% last month, broadly in line with forecasts for a 10.1% increase, while retail sales jumped 13.7%, beating estimates for a 13.3% gain.
Copper futures rose to a three-week high on Tuesday, after data showed industrial production in China increased in line with expectations last month.
Copper gained aided by a weaker dollar, with steady buying from top consumer China also helping to underpin prices.
Investors are also watching the U.S. Fed, which is expected to begin trimming its commodity-friendly monthly asset purchases in March
Physical demand for copper remained strong, with bonded copper premiums up $5 at $195/$210 a tonne from month-ago levels.

On the New York Mercantile Exchange, light sweet crude futures for delivery in January traded at USD98.68 a barrel, up 0.26%, after hitting an overnight session low of USD97.11 and a high of USD98.74.
On the ICE Futures Europe exchange Brent crude, the global benchmark, fell one cent to USD109.38 a barrel.
The American Petroleum Institute said its weekly inventory survey found crude stocks fell by 7.5 million barrels last week, setting the tone for more closely followed data on stocks by the U.S. Energy Information Administration Wednesday.
Analysts forecast a drawdown on U.S. oil inventories of 2.95 million barrels for the week ended Dec. 6.
Crude oil prices gained in early Asian trade Wednesday on global economic growth prospects and expectations of continued drops in U.S. stocks.
Crude gained amid lingering applause for Friday’s bullish U.S. unemployment report, while a weaker dollar also bolstered demand for the commodity.
OPEC pumps least crude in more than two years as Saudi cuts production according to OPEC monthly oil market report.
Total crude oil inventories: EXP: -2.2M PREV: -5.6M. Actual is at 9.00PM.
 Technical Levels

GOLD 1245 1228 1273 1284
SILVER 19.87 19.50 20.47 21.06
COPPER 3.2890 3.2765 3.3125 3.3235
CRUDE 97.58 96.66 99.08 99.66
Commodity Contract S3 S2 S1 R1 R2 R3
Global Economic Data
8.30P.M Treasury Sec Lew Speaks

9.00P.M Crude Oil Inventories -5.6M -2.2M MEDIUM
11.31P.M 10-y Bond Auction 2.75 2.7 MEDIUM
Treasury Sec Lew Speaks
Description Due to testify on the International Monetary Fund before the House Financial Services Committee, in Washington DC;
Source Department of the Treasury (latest release)
Speaker US Treasury Secretary Jack Lew;
FF Notes US Treasury Secretary Feb 2013 - Jan 2017. He speaks frequently on a broad range of subjects - only speeches that might have direct market impact are listed on the calendar;
Why Traders
It's the Treasury Secretary's job to communicate the US President's economic policies, and his speeches are often used to signal policy shifts to the public and to foreign governments;
Description Due to testify on the International Monetary Fund before the House Financial Services Committee, in Washington DC;
Source Department of the Treasury (latest release)
Wholesale Inventories m/m
Source Energy Information Administration (latest release)
Measures Change in the number of barrels of crude oil held in inventory by commercial firms during the past week;
Usual Effect No consistent effect - there are both inflationary and growth implications;
Frequency Released weekly, 4 days after the week ends;
Next Release Dec 18, 2013
FF Notes While this is a US indicator, it most affects the loonie due to Canada's sizable energy sector;
Why Traders
It influences the price of petroleum products which affects inflation, but also impacts growth as many industries rely on oil to produce goods;
Also Called Crude Stocks, Crude Levels;
Acro Expand Energy Information Administration (EIA);
10-y Bond Auction
Source Treasury Direct (latest release)
Measures Highest yield on 10-year bonds the government sold at auction, and the bid-to-cover ratio of the auction;
Usual Effect No consistent effect - there are both risk and growth implications;
Frequency Conducted monthly;
Next Release Jan 8, 2014
FF Notes Auction results are reported in an 'X.XX|X.X' format - the first number is the highest interest rate of the bonds sold, and the second number is the bid-to-cover ratio (number of bids made per bid accepted);
Why Traders
Yields are set by bond market investors, and therefore they can be used to decipher investors' outlook on future interest rates. The bid-to-cover ratio represents bond market liquidity and demand, which can be used to gauge investor confidence;
Also Called Treasury Auction, Note Auction;


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