SPDR Gold Trust (ETF), NYSE:GLD, iShares Silver Trust (ETF), NYSE:SLV, United States Oil Fund LP (ETF) NYSE:USO

The Overall Fundamentals
Precious Metals

The complex retreated during the week with the exception of Palladium. However, I believe that Gold will be the biggest beneficiary under the central bank easing environment. Weakening of the USD after announcement of the Big Stimulus, talks of inflation and currency debasement are factors to send the precious Yellow metal higher.

After a short rebound last week, the Gold/Silver ratio resumed its decline. Silver has performed the best in the complex so far this year. The precious White metal has gained +23.9%, compared with Platinum’s 18.4%, Gold’s +13.2% and Palladium’s drop of -2.78%.

The latest data set from China suggested that Silver’s demand has improved.

Remaining a net importer, imports fell just -3% Y-Y to 304 metric tons while exports fell about -10% Y-Y to 61.5 metric tons. Overall industrial demand remains weak as the semiconductor billings data signaled that shipments in Europe and US despite recovery in China and Japan.

A further rise in Silver will continue to be driven by ETF demand. Concerns over inflation and currency debasement have driven capitals to the precious White metal as a cheaper alternative of Gold
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Crude Oil
Crude Oil early in the week continued the correction in the past week and drifted lower.
Prices recovered as the Spanish 2013 Budget was well received. The front-month contract for WTI Crude Oil initially fell below 90, the first time in more than a month, before ending the week at 92.19, down -0.75%, while Brent Crude’s contract added +0.87% during the week.
The relative out performance of Brent Crude was driven by the physical market.
Operation in Buzzard in the North Sea is expected to delay until 15 October or later while Crude Oil cargoes at Forties will probably be delayed further. It is reported that a 6 October Forties cargo has been delayed and more delays are likely. These have also helped widened the WTI-Brent spread to over US$20 bbl.
Nat Gas
The DOE-EIA reported that Nat Gas inventory rose +80 bcf to 3 576 bcf in the week ended 21 September. Stocks were +296 bcf higher than the same period last year and +282 bcf above the 5-yr average of 3 294 bcf.
Baker Hughes (NYSE:BHI) reported that the number of Nat Gas rigs slipped -19 units to 435 in the week ended 27 September. Crude Oil rigs increased +8 units to 1 410 and miscellaneous rigs stayed unchanged at 3 units and the total number of rigs slid -11 units to 1 848.
Directionally oriented combined Oil, Gas, and Miscellaneous rigs slipped -10 units to 192 units while horizontal rigs decreased -7 units to 1 142 and vertical rigs added +6 units to 514 during the week.
The Overall Technicals
Comex Gold (GC)


Gold consolidated below 1790, the Resistance last week. Despite a rally attempt, Gold is limited below this mark IMO.

More sideway trading may be seen.

Note: as long as 1720, the minor support holds, this run North is expected to continue.

A clear crack of 1792.7/1804.4, the Resistance zone, will have larger Bullish implication and will show the way to 1923.7, the historical high. But, a break of 1720 will indicate near term reversal and will turn my outlook Bearish for a move to 1674, the Key support 1st

The Big Picture: price actions from 1923.7 high are seen as a medium term consolidation pattern. There is no indication that this consolidation is finished, and more range trading could be seen. In any case, any falling leg should be contained by 1478.3/1577.4 the Support zone and bring on a rebound. A clear break of 1792.7/1804.4, the Resistance zone, augurs that the long term up trend may be resuming for a new high above the 1923.7 mark.

The Long Term Picture: with 1478.3, the Key support, intact, there is no change in my long term Bullish outlook for Gold. While some more medium term consolidation cannot be ruled out, I still look for a break of 2000 psych level sooner or later. Stay tuned…

Comex Gold Continuous Contract Daily Chart

Comex Silver (SI)

Silver continued to consolidate below 35, the psych mark, last week and more sideway trading could be seen. But, as long as 32.72, the Key support, holds, I see this rally extending. A move above 35.26 will target 37.58, the Key resistance mark. I will be cautious and looking for reversal signal at it approaches 37.58. A break of 32.72 will be the 1st signal of a near term reversal and turns the focus back to 30.195 the next support mark.

The Big Picture: as long as 37.58, the Key resistance holds, price actions from 26.105 are viewed as a consolidation pattern, that means, the down trend from 49.82 high is not over, and an new low below 26.105 is favored. A clear break of 37.58 dampens this Bearish POV, and could bring stronger raise back to 49.82 the high.

The Long Term Picture; the Big Q remains, is 49.82 is a medium term or long term Top. With 61.8% Fibo retracement of 8.4 to 49.82 at 24.22 intact, price actions from 49.82 could eventually turn out to be a consolidation, and a break of 37.58, Key resistance, will increase the odds of a new high above 49.82 will be made sooner rather than later. Stay tuned…

Comex Silver Continuous Contract Daily Chart

Nymex Crude Oil (CL)

Crude Oil fell to 88.95 last week before recovering. Some consolidations could be seen this week, but another fall is mildly in favor as long as 94.08 holds. The recent fall from 100.42 extends to 61.8% the Fibo retracement of 77.28 to 100.42 at 86.12 and possibly lower. I expect strong support ahead of 77.28 to contain any Southside action. But, a clear break of 94.08 will turn my bias to the Northside for a test of the resistance at 100.42. I do expect another rise to 100.55 after completing the current consolidative price action.

The Big Picture: this current actions uggests that prices from 114.83 are a triangle consolidation pattern. The fall from 100.42 is likely the 5th and the last leg of the consolidation. That being the case any Southside action should be contained above 77.28 and bring on an upside breakout eventually. A clear break of 110.55 will suggest that whole rebound from 33.29 has resumed  for a move above 114.83.

The Long Term Picture: Crude Oil is in a long term consolidation pattern from the high of 147.27, with the 1st wave completed at 33.2. The corrective structure of the rise from 33.2 indicates that it is the 2nd wave of the pattern. Crude Oil could make another high above 114.83, but I see strong resistance ahead of 147.24 to bring reversal for the 3rd leg of the consolidation pattern. Stay tuned…

Nymex Crude Oil Continuous Contract Daily 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.

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