COMEX Report: Commodity Technical Outlook

GOLD

Gold edged lower overnight to open at 1227.00/1228.00. Shortly after open, it briefly touched a high of 1228.00/1229.00 before declining quickly to a low of 1218.75/1219.75 as global equities edged higher and the Dollar strengthened following robust employment data from the U.S. that showed a better-than-expected increase in private sector jobs. Choppy trades for the remainder of the session led the metal to close higher at 1225.50/1226.50.

Gold tried lower today but held above our December high pivot of 1218. The close at 1225 keeps us in the bullish up cycle that started off 1882 on December 31. We like the idea of a test above 1252 while 1218 remains firm.

Gold ended with losses weighed down by upbeat U.S. private-sector jobs data

Minutes of Fed’s meeting, showed many members wanted to proceed with caution in trimming the central bank’s $85 billion monthly asset purchases.

SPDR gold trust holding dropped by 1.50 tonnes i.e. -0.19% to 793.12 tonnes from 794.62 tonnes.

Technical Levels

	S1	S2	R1	R2
GOLD	1218	1210	1232	1239

Commodity Contract S2 S1 R1 R2

 SILVER

Silver dropped overnight to open at 19.61/19.66, which was the high of the day. It then followed gold to a low of 19.30/19.35 before recovering to close at 19.51/19.56.

Silver is weak today closing at 19.51. The rejection of Silver near 20.38 has taken the shine off the metal. Major support is not seen until 18.91. 

The Gold-Silver ratio spiked higher again today with the ratio moving above recent high of 62.87. The topside appears the risk in the ratio with key resistance not seen until 64.10 the December 4 high.

Silver dropped after data showed that U.S. non-farm private employment rose at the strongest pace in two years last month.

US non-farm private employment rose by a seasonally adjusted 238,000 in December, easily surpassing expectations for an increase of 200,000

Two top Fed officials said they expected the bank to reduce stimulus at a steady pace.

Technical Levels

	S1	S2	R1	R2
SILVER	19.32	19.01	19.83	20.12

Commodity Contract S2 S1 R1 R2

COPPER

On the Comex division of the New York Mercantile Exchange, copper futures for March delivery traded at USD3.360 a pound during European morning trade, little changed on the day. Comex copper prices traded in a range between USD3.355 a pound and USD3.372 a pound.

The March contract ended Tuesday’s session unchanged at USD3.359 a pound. Copper prices were likely to find support at USD3.330 a pound, the low from January 6 and resistance at USD3.387 a pound, the high from January 3.
Investors were turning their attention to the minutes of the Fed’s December meeting, due for release later Wednesday, for indications on the possible timing of further reductions in the central bank’s stimulus program.

Copper futures swung between small gains and losses in rangebound trade on Wednesday, as investors remained cautious ahead of the minutes of the Federal Reserve’s December meeting and the upcoming U.S. jobs report.

Copper ended with losses weighed down by a strong dollar and concerns about economic recovery in China.

Euro zone unemployment was unchanged at a record high for the eighth month in a row in November, but retail sales made the biggest monthly jump in 12 years.

US ADP employment in December grew more than expected, hitting a 13-month high and lifted market optimism toward US December non-farm employment data.

Technical Levels

	S1	S2	R1	R2
COPPER	3.3260	3.3095	3.3680	3.3935

Commodity Contract S2 S1 R1 R2

CRUDE

On the New York Mercantile Exchange, West Texas Intermediate crude for delivery in February traded at USD92.55 a barrel during Asian morning trade, up 0.23%. On Wednesday New York-traded oil futures held range bound between USD92.48 a barrel and USD92.64 a barrel.
The February contract settled down at USD92.61 a barrel on Wednesday. Nymex oil futures were likely to find support at USD92.57 a barrel, the low from Dec. 2, and resistance at USD94.58 a barrel, Monday's high.

The U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories fell by 2.68 million barrels in the week ended Jan. 3, beating expectations for a decline of 849,000 barrels. Total U.S. crude oil inventories stood at 357.9 million barrels as of last week.
The report also showed that total motor gasoline inventories increased by 6.24 million barrels, significantly higher than expectations for a gain of 2.28 million barrels. 

Crude oil dropped after official data revealed gasoline and distillates stockpiles rose, while falling crude inventories cushioned losses somewhat.

The U.S. EIA said in its weekly report that U.S. crude oil inventories fell by 2.68 million barrels

While Libyan officials say production could recover to nearly 600,000 barrels per day (bpd) this week. More Updates

Technical Levels

	S1	S2	R1	R2
CRUDE	91.60	90.97	93.52	94.81

Commodity Contract S2 S1 R1 R2

Global Economic Data

TIME	DATA	PRV	EXP	IMPACT
7.00P.M	Unemployment Claims	339K	337K	STRONG
11.31P.M	30-y Bond Auction	3.9	2.4	LOW

Unemployment Claims

Source	Department of Labor (latest release)
Measures	The number of individuals who filed for unemployment insurance for the first time during the past week;
Usual Effect	Actual < Forecast = Good for currency;
Frequency	CRUDE Released weekly, 5 days after the week ends;
Next Release	Jan 16, 2014
FF Notes	This is the nation's earliest economic data. The market impact fluctuates from week to week - there tends to be more focus on the release when traders need to diagnose recent developments, or when the reading is at extremes;
Why Traders Care	Although it's generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions. Unemployment is also a major consideration for those steering the country's monetary policy;
Also Called	Jobless Claims, Initial Claims;

30-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	Feb 13, 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 Care	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;