Gold and Silver

Gold futures on the COMEX Division of the New York Merc finished slightly lower Wednesday, as hopes for progress on Europe's debt troubles eroded Gold's appeal as a safe-haven asset, the stronger USD also weighed on the Gold price.

The most active Gold contract for Dec. delivery fell 3.6, or 0.2% to 1,826.5 oz.

Although Moody's Investors Service downgraded 2 of France's biggest banks and placed a 3rd on review, market analysts noted that the highly-expected move failed to spur renewed demand for gold as a safe-haven.

A trader mentioned that market players have showed some cautious optimism on the Euro zone debt issue, after news showed that German, French and Greek leaders were planning to take steps to curb Europe's debt trouble.

News from the European Union continues to reflect the fragility in the region. Greece continues to be at the center of the storm as the regions' Financial Ministers are lending moral support and continue to state that there is NO PLAN B for Greece. The fragility is affecting the Euro and lending slight strength to the Greenback, which has slowing Gold's momentum some.

Silver for Dec. delivery dipped 0.66, or 1.6%, to 40.533 oz. and Platinum for Oct. delivery added 2.4, or 0.1% to 1,815.9 oz.

Crude Oil

 

The US Crude Oil benchmark got pressured after the US EIA reported that the Gasoline inventories added 1.9-M bbls in the week ending September 9, exceeding expectations. And EIA said the fuel demand during this Summer driving season dipped to the lowest level since Y 2003.

But the Crude Oil inventories dropped sharply by a greater-than- expected 6.7-M bbls due to the production shutdown caused by the Tropical Storm Lee.

In London, the Brent crude rose as Greece expressed its determination to meet all its obligations. After a 25-minute phone call meeting among German Chancellor Angela Merkel, French President Nicolas Sarkozy and Greek Prime Minister George Papandreou, the Greek government said the debt-burdened euro zone member country would not leave the bloc despite all these recent rumors, which put a floor under the panic market.

And there was news that the BRICS countries including Brazil, Russia, India, China and South Africa were considering to buy European bonds to provide help. This also offered comfort investors.

WTI Crude Oil for October delivery fell 1.30 or 1. 44% to settle at 88.91 bbl on the New York Merc. But in London, Brent Crude for October delivery gained 0.51, or 0.46% to close at 112.40 bbl on the results of the German, French and Greek leaders' phone call meeting.

 

The Overall Technicals

Comex Gold (GC)

Intra-day bias in Gold is Neutral for the moment. Price actions from 1923.7 is either consolidation to rise from 1705.4 or the 3rd leg of the consolidation pattern from 1917.9.

In either case, more choppy trading should be seen in range of 1705.4/1923.7. But in case of deeper fall, I expect strong support above 1705.4 to contain any downside action, and bring up-trend resumption.

A clear break above 1923.7 should drive Gold towards 61.8% projection of 1478.3 to 1917.9 from 1705.4 at 1977.1.

The Big Picture: Gold's long term up trend is intact and there is no sign of a reversal yet. Another record high should be seen in here. But I will be cautious on another near term reversal near to 2000, the psych mark, and then look for some longer consolidation. A break of 1705.4 will augur that Gold has Topped out with a Double Top Reversal pattern; 1917.9, 1923.7, and in such a case, a deeper pull back could be seen back towards resistance turned 1577.4 Support. Stay tuned...

Comex Silver (SI)

 

Silver dipped to 39.75 but recovered. A deeper fall could go to 38.76, the Key support.

Note: there is no confirmation of trend reversal in here and the recent rebound from 32.30 might continue. A break above 43.50 should turn bias back to the Northside for a move to 44.275, the Key resistance, and above.

The Big Picture: Silver's price actions from 49.82 are treated as consolidation pattern in the long term up- trend. The 1st leg from 49.82 is finished at 32.30. The rise from 32.30 is treated as the 2nd leg, and might extend. But I will look for a reversal signal as it approaches 49.82, and a break of 37.025, the Key support, will turn my outlook Bearish for another falling leg to extend the consolidation. However, before a clear break of 37.025, I will stay cautiously Bullish Silver near term. Stay tuned...

Nymex Crude Oil (CL)

Crude Oil's recovery from 75.71 is still in progress and with 83.20, the minor support intact, a further rise is still seen as such consolidation extends.

At this point, I still expect any upside to be limited to below 100., Key resistance, and bring resumption of fall from 114.83. A break below 83.20, the minor support, will turn the bias back to the Southside for retesting 75.71 low first.

The Big Picture: the medium term rebound from 33.2 is treated as the 2nd leg of consolidation pattern from 147.24 and should have finished at 114.83. This decline should target the next Key cluster support at 64.23; 61.8% retracement of 33.2 to 114.83 at 64.38 next. A clear break there will show the way to retest 33.2, the low. A break of 100.62, the Key resistance, will say that he fall from 114.83 completed after missing the 100% projection target. The corrective structure of such decline in turn augurs that rise from 33.2 is still in progress for another high above 114.83.

 

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.