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

The Overall Fundamentals
Last Friday’s sharp decline sent commodities broadly lower on weekly basis. Disappointing corporate earnings and the uneventful EU summit were Key reasons damping market sentiment and reducing demand for commodity investments.

In the commodity sector, precious metals declined as the USD rose. Gold continued to drift lower after failing to test the 1800 level earlier this month. Settling at 1724 Friday, the precious Yellow metal has already retreated ab -4%out off its recent high.

The boost after Fed’s announcement of QE-3 has faded with ETFs showing outflow of holding in recent weeks.

Gold is expected to move within a range in the near-term with the lack of follow-through in monetary easing stimulus.

The US would unlikely announce further change in monetary stance ahead of the President election in November.

With China’s latest economic data showing signs of improvement, officials will likely take a “wait-and-see” mode and avoid adopting further easing policies so as not to drive up a rapid rebound in property prices.

On Nat Gas, the DOE-EIA reported that Nat Gas storage rose +51 bcf to 3 776 bcf in the week ended October 12. Stocks were +181 bcf higher than the same period last year and +249 bcf above the 5-year average of 3 527 bcf.

Baker Hughes reported that the number of Nat Gas rigs rose +5 units to 427 in the week ended 19 October. Oil rigs decreased -1 unit to 1 410 and miscellaneous rigs stayed unchanged at 2 units and the total number of rigs climbed +4 units to 1 839. Directionally oriented combined Oil, Nat Gas, and Miscellaneous rigs rose +6 units at 200 units while horizontal rigs increased +2 units to 1 114 and vertical rigs dropped -4 units to 525 during the week.

The Overall Technicals

Comex Gold (GC)

Gold’s fall from 1798.1 extended last week and breached support at 1720. The development argues that rebound from 1526.7 has completed at 1798.1. And a deeper decline would now be seen to 38.2% Fibo retracement of 1526.7 to 1798.1 at 1694.4 and below.

On the upside: a break above the resistance at 1755 is needed to signal short term bottoming. Barring that, outlook is now mildly Bearish in near term.

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

The Long Term Picture: with 1478.3 support intact, there is no change in the long term Bullish outlook in Gold. Some more consolidation cannot be ruled out, but, I anticipate an eventual break of 2000 psych mark in the long run. Stay tuned…

Comex Gold Continuous Contract Weekly Chart

Comex Silver (SI)

Silver’s fall from 25.445 extend last week and the break of  support at 32.72 indicates that rise from 26.105 finished. Initial bias is on the Southside this week and current decline should target 50% Fibo retracement of 26.105 to 35.445 at 30.775 next.

On the upside: a break above the minor resistance at 33.325 is needed to signal near term bottoming. B, outlook warring that I am mildly Bearish Silver.

The Big Picture: as long as resistance holds at 37.58, 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 break of 37.58 will dampen this Bearish POV and could bring stronger raise back to 49.82 high.

The Long Term Picture: the Big Q remains on whether 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  clear break of the resistance at 37.58 will increase the odds of a new high above 49.82. Stay tuned…

Comex Silver Continuous Contract Daily Chart

Nymex Crude Oil (CL)

Crude Oil stayed in range above 87.70 last week and outlook remains unchanged. The fall from 100.42 is favored to continue for a 61.8% Fibo retracement of 77.28 to 100.42 at 86.12 and possibly lower. But, in that case I expect strong support ahead of 77.28 to contain any Southside. A clear break of 93.66 will turn the bias back to the Northside for a test of the resistance at 100.42.

The Big Picture: current development suggests that price actions from 114.83 are a triangle consolidation pattern. Fall from 100.42 is likely the 5th and the last leg of such consolidation, so, any Southside should be contained above 77.28 and bring an upside breakout eventually. Break of 110.55 will strongly suggest that whole rebound from 33.29 has resumed for a test of 114.83 and above.

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 its 2nd wave of the consolidation pattern. While it could make another high above 114.83, 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 Weekly Chart

Nymex Natural Gas (NG)

Nat Gas edged higher to 3.647 last week but upside momentum is not too convincing for the moment. Nonetheless, near term outlook stays bullish as long as 3.398 support holds. Current rally is still expected to continue to medium term channel resistance next (now at around 3.92). However, break of 3.398 will indicate that a short term top is at least formed and will turn near term outlook bearish for at least a deep pull back.

The Big Picture, recent developments argued that medium term decline from 6.108 is completed at 1.902 already. It’s bit early to confirm but Bullish convergence condition in weekly MACD suggests that the down trend from 13.694 the 2008 high is possibly over too. Sustained break of the channel resistance now at around 3.92 will set the stage for a test on 4.983, the Key resistance next. A break of the support at 2.575 augurs that the rebound from 1.902 is over and the medium larger down trend is still in progress for a new low.

The Long Term Picture: a clear break of 3.255 resistance will be an important signal of long term bottoming reversal and could at least give a push to the resistance Zone at 4.983/6.10. Stay tuned…

Nymex Natural Gas 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.