The Overall Fundamentals
Precious Metals: Gold resumed its decline for a 3rd day Friday trading as the US employment report was not bad enough to cause the US Fed not to QE-3 soon.
The precious Yellow metal fell after coming close to 1630 critical resistance as it dropped form a high of 1608.35 to trade around 1600, which if breached may take Gold down to support at 1580.
Thursday, US ADP employment change showed that private sector hiring exceeded forecasts as it came in at 176,000 from a revised of 136,000.
The data gave indication that the awaited jobs report Friday will show upbeat figures, but it fell short by 20-K of the expected 100-K jobs in June, unemployment still stands at 8.2%.
With that data the Fed could refrain from launching more non-standard measures to stimulate, which will dampen the demand on Gold as an inflation hedge.
The wave of monetary decisions announced by major central banks Thursday sparked fears in markets regarding the outlook for the global economy, which in turn triggered a sell-off in commodities and shares as investors resorted to safe haven assets, especially the USD and JPY.
Gold saw pressure from the USD's rally as it advanced more than 1% in Thursday's session, the biggest daily rise in nearly 8 months, is currently hanging around the 82.50 mark.
The precious Yellow metal may succeed in ending this week on a gain, but it depends on the market's action following the announcement of the non-farm payrolls report.
WTI Crude Oil for Aug delivery traded lower at 84.45 down 2.77 (-3.18%) from the day's opening level of 86.66 bbl.
The Overall Technicals
Comex Gold (GC)
Gold's recovery was limited at 1625.7 last week, below 1642.4, the Key resistance, and reversed.
The initial bias is mildly on the Southside for this week for a look at 1547.6. A break there will possibly bring a new low below 1526.7. I will look for a reversal signal again as it approaches 1500, the psych mark.
On the upside: a move above 1625.7 will resume the rise fro 1547.6 to 1642.4, the Key resistance, instead.
The Big Picture: the price actions from 1923.7, the high, are seen as a medium term consolidation pattern, and there is no indication that the consolidation is finished, meaning more range trading is ahead. The downside of any falling leg should be contained by 1478.3/1577.4, the support zone, and bring on a rebound. But, a clear break of the resistance at 1792.7 is needed to be the 1st signal of up-trend resumption. Barring that, the consolidation will extend IMO.
The Long Term Picture: with 1478.3, the Key support intact, there is no change in the long term Bullish outlook for Gold. Some more medium term consolidation cannot be ruled out, and I see an eventual break of 2000, the psych mark, in the long run. Stay tuned...
Comex Gold Continuous Contract Weekly Chart
Comex Silver (SI)
Silver's rebound was limited to 28.445 last week and reversed.
The Initial bias is back to the Southnside this week for a move to 26.07, the next support. A clear break there will resume the decline from 37.48, and should target next long term fibo mark at 24.22.
On the upside: a move above 28.445 will bring another rally to 29.856, the Key resistance.
The Big Picture: the price actions from 26.15 should be viewed as a consolidation pattern. At this point, I am still slightly favoring the case that such consolidation finished at 37.48. And, the fall from 37.48 should extend to 61.8% fibo retracement of 8.4 to 49.82 at 24.22 and below. But, a break of 29.856 suggests one more rising leg before consolidation from 26.15 finishes.
The Long Term Picture: the Big Q remains on whether 49.82 is a medium term or long term Top. Still this action favors the latter. I would still prefer to see sustained break of 61.8% fibo retracement of 8.4 to 49.82 at 24.22 to confirm.
Barring that , the price action from 49.82 could be developing into a sideway pattern. Stay tuned...
Comex Silver Continuous Contract Weekly Chart
Nymex Crude Oil (CL)
Crude Oil faced strong resistance below the 38.2% fibo retracement mark of 110.55 to 77.28 at 89.99, formed a temporary top at 88.98 and retreated sharply last week.
The initial bias remains Neutral for some consolidations.
At this point, I favor the case that fall from 110.55 finished at 77.28. So, the Southside retreat should be contained above 77.28 and bring about another rise, and a move above 88.98 targets 90, the psych mark.
The Big Picture: the price actions from 114.84 are viewed as a 3 wave consolidation pattern with fall from 110.55 as the 3rd leg. Such a decline might have finished earlier than expected at 77.28. Sustained trading above 90 psych mark will bring stronger rally towards 114.83, the Key resistance mark. A break there will augur a resumption of the up-trend from 33.2.
On the Downside: another fall cannot be ruled out, buteven in that case, the is strong support below 74.95 and above 61.8% fibo retracement of 33.20 to 114.83 at 64.38 and bring another medium term rise.
The Long Term Picture: Crude Oil is in a long term consolidation pattern from 147.27, with 1st wave completed at 33.2. The corrective structure of the rise from 33.2 indicates that it is the 2nd wave of the consolidation pattern. While it could make another high above 114.83, I believe that the strong resistance ahead of 147.24 will bring on a reversal for the 3rd leg of the consolidation pattern. Stay tuned...
Nymex Crude Oil Continuous Contract Weekly Chart
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.