COMEX Report of Technical Analysis

GOLD

Gold edged marginally lower overnight to open at the intraday low of 1317.00/1318.00. It moved up higher following weaker-than expected U.S data that included a drop in NY Fed manufacturing activity and a decline in home builder confidence as investors remain cautious on global economic growth. 

The metal consolidated to close at the session high of 1324.00/1325.00. Gold closed lower today at 1324, unable to breach resistance in the 1337 area after moving from a low of 1182 to a high of 1331 since the end of 2013. Support is at 1308, the 50% retracement of the last downtrend (August to December 2013), followed by the 200-day moving average at 1303. RSI in Gold on the daily chart had moved into serious ‘overbought’ territory at 75.60, so a correction is likely healthy for the uptrend. We may see a temporary pullback into the 1284 area. We would re-assess our bullish view if gold breaches 1278 on the downside.

 SILVER

Silver moved marginally higher overnight to open at 21.50/21.55, which was also the low of the day. It moved to a high of 21.88/21.93 prior to concluding the session at 21.87/21.92.

Silver closed higher at 21.92, forming a potential hanging man in the candlestick charts. A hanging man, as implied by the name, would be bearish, but given it follows a strong advance, it must be confirmed by a down-day tomorrow. The strong breakout on Friday through resistance in the 20.64 area was bullish, and was confirmed by a breakout in RSI to a new 6-month high in the 76.50 area. There is a downtrend in play off the April 2011 high which may act as resistance. This downtrend currently comes in at 22.51.

The gold-silver ratio made another bearish drop today after a big drop on Friday. The ratio is currently trading at 60.43. It has now definitively broken its uptrend which had support in the 61.94 area – this area should now act as resistance. This latest move opens up a full retracement to the 57.09 low from August 2013.

COPPER

Copper settled up 0.8% as support from a strong euro helped cushion concerns about short-term demand in China after its central bank moved to tighten the money supply.

The People’s Bank of China (PBOC) issued cash-draining forward bond repurchase agreements on Tuesday, sucking $7.9 billion out of the system, pushing up the cost of money after unexpectedly strong credit growth in January. China is the biggest consumer of copper, which is used in construction and power cables. It imported record volumes of copper last month, partly for consumption and partly to ease tight credit conditions.

Goldman Sachs sees Chinese bonded inventories at 700,000 tonnes, up from 550,000 tonnes since the beginning of the year, it said in a note. The euro hit a seven-week high against the dollar, which was trading at a six-week low against a basket of currencies.

In the week ahead, the focus will be on the U.S. Federal Reserve’s tapering of monetary stimulus, with the release of its minutes on Wednesday, and on China’s slowdown, with a purchasing managers’ index due on Thursday. Both factors have been behind this year’s sell-off in emerging markets. U.S. manufacturing last week recorded its biggest drop in more than 4-1/2 years in January as cold weather disrupted production. It was the latest indication that the world’s biggest economy got off to a weak start this year. 

CRUDE

On the New York Mercantile Exchange, West Texas Intermediate crude for delivery in April traded at USD102.45 a barrel during Asian trading, up 0.34%.

On Tuesday, the New York-traded oil futures hit a session low of USD102.27 a barrel and a high of USD102.66 a barrel to settle at 102.10 a barrel.

Nymex oil futures were likely to find support at USD100.31 a barrel, the earlier low, and resistance at USD102.95 a barrel, the high from Oct. 16.

Updated weather forecasting models indicated that a strong winter storm was set to sweep over the northeastern U.S. on Tuesday and bring strong winds and fresh snowfall.

Frigid weather reports sent crude prices rising on sentiments demand for heating oil will climb as temperatures fall across the heavily-populated northeastern U.S.

Soft data out of the U.S. sent prices rising as well due to the monetary implications they may bring.

The dollar weakened after the Federal Reserve Bank of New York said that its general business conditions index came in at 4.48 for February, down from a 20-month high of 12.51 in January. Analysts had expected the index to decline to 9.00.

Nymex crude prices continued to rise during Asian trading hours on Wednesday after hitting four-month highs on strong U.S. data, a winter storm and supply concerns in the Middle East.

Technical Levels

	SUPPORT 1	SUPPORT 2	RESISTANCE 1	RESISTANCE 2
GOLD	1306	1294	1325	1332
SILVER	20.74	20.07	21.79	22.16
COPPER	3.2493	3.2341	3.2748	3.2851
CRUDE	99.66	98.62	100.70	101.10

Global Economic Data

TIME :IST	DATA	PRV	EXP	IMPACT
7.00P.M	Building Permits	0.99M	0.98M	STRONG
7.00P.M	PPI m/m	0.4%	0.2%	STRONG
7.00P.M	Core PPI m/m	0.3%	0.2%	MEDIUM

Building Permits

Source	Census Bureau (latest release)
Measures	Annualized number of new residential building permits issued during the previous month;
Usual Effect	Actual > Forecast = Good for currency;
Frequency	Released monthly, about 17 days after the month ends;
Next Release	Mar 18, 2014
FF Notes	While this is monthly data, it's reported in an annualized format (monthly figure x12);
Why Traders Care	It's an excellent gauge of future construction activity because obtaining a permit is among the first steps in constructing a new building;
Also Called	Residential Building Permits;
Source	Census Bureau (latest release)

PPI m/m

FF Alert	Source changed series calculation formula as of this release;
Source	Department of Labor (latest release)
Measures	Change in the price of finished goods and services sold by producers;
Usual Effect	Actual > Forecast = Good for currency;
Frequency	Released monthly, about 14 days after the month ends;
Next Release	Mar 14, 2014
FF Notes	Tends to have more impact when it's released ahead of the CPI data because the reports are significantly correlated;

Core PPI m/m

FF Alert	Source changed series calculation formula as of this release;
Source	Department of Labor (latest release)
Measures	Change in the price of finished goods and services sold by producers, excluding food, energy, and trade;
Usual Effect	Actual > Forecast = Good for currency;
Frequency	Released monthly, about 14 days after the month ends;
Next Release	Mar 14, 2014
FF Notes	Food, energy, and trade prices make up about 40% of overall PPI which tends to mute the importance of the Core data;
Also Called	Core Finished Goods PPI, Core PPI for Final Demand;