The Overall Fundamentals

Gold futures on the COMEX Division of the New York Merc closed modestly lower Wednesday, as players booked profits in anticipation of an unfavorable decision to be announced by US Federal Reserve.

The most active Gold contract for Dec. delivery declined one USD, or 0.055%, to 1,808.1 oz.

Market analysts said that Gold investors, expecting that the Fed is unlikely to bring another round of quantitative easing (QE-3) program, disappointingly opted to cash in their profits. Gold rose more than 30.00 Tuesday.

The Fed later announced a plan to swap shorter-maturity government securities for longer-term ones, in a bid to boosting the slow-moving US economy. But, the market widely hoped it would carry out QE-3, which could push down the value of USD and, that is conducive to the metal's market.

Most analysts still believed that Gold would keep the Bull charging in the long run, as the supportive forces, including economic slowdown and inflation, remained intact.

Silver for Dec. delivery rose 0.332, or 0.8%, to 40.469. Platinum for Oct. delivery also gained 6.3%, or 0.35% to 1,788.2.

Note: just after the FMOC report Wednesday Gold sold off. Both metals were pressured by the rise seen in the USD. Gold recently put in a low at 1781.30, and Silver remains just above overnight highs at 39.77.

Crude Oil

 

Total Crude Oil and petroleum products stocks declined -5.25 mmb to 1078.08 mmb in the week ended September 16.

Crude Oil stockpile fell -7.34 mmb to 339.05 mmb as 3 out of 5 PADDs recorded stock draws. Cushing stock slipped -0.23 mmb to 32.00 mmb. Utilization rate added +1.3% to 88.3%.

WTI Crude Oil prices rose after the report. The front-month contract rose to as high as 87.99 as Crude Oil inventory plummeted more than expected.

Gains were pared as broad market sentiment remained weak.

 

The Overall Technical Outlook

Comex Gold (GC)

No change in Gold's outlook as the choppy fall from 1923.7 continues and Gold is bounded inside range of 1705.4 and 1923.7.

The fall from 1923.7 is treated as either consolidation to rise from 1705.4 or the 3rd leg of the consolidation pattern from 1917.9.

In either case, I expect Strong support above 1705.4 to contain and Southside and bring on a up-trend resumption. A break above 1923.7 should in turn send Gold towards 61.8% projection of 1478.3 to 1917.9 from 1705.4 at 1977.1 next.

The Big Picture: Gold's long term up-trend is intact and there is no signal of reversal yet. Another record high should still be seen in here. But I am being cautious and looking for another near term reversal near to 2000, the psych mark, and finally bring some lengthier consolidation. A break of 1705.4 augurs that Gold has topped out with a Double Top reversal pattern at 1917.9, 1923.7, and in such a case, a deeper pull back could be seen back towards resistance turned 1577.4, the Key support, instead. Stay tuned...

Comex Silver (SI)

Silver is bounded in range of 38.76/44.275 for now. I am treating Silver's price actions from 44.275 as consolidation only and rise from 33.20 is still in favor to continue.

A break above 40.985 will turn bias to the Northside. A further break of 43.50 will be taken as signal of rise resumption toward 44.275 and above.

But a clear break of 38.76 will turn the bias to the Southside for a test on 37.025, the Key near term support.

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 has completed at 32.30, the rise from 32.30 is treated as the 2nd leg and might extend further. I will be looking for a reversal signal as it approaches 49.82 and a break of 37.025, the Key support, will turn the outlook Bearish for another falling leg to extend the consolidation.

Barring a sustained break of 37.025, I am cautiously Bullish in Silver near term. Stay tuned...

Nymex Crude Oil (CL)

The choppy recovery from 75.71 may have completed at 90.52. Intra-day bias is cautiously on the Southside toward 83.20 first. A break there will affirm this and target test of 75.71.

On the Upside: a clear break of 90.52 is needed to confirm resumption of rebound form 75.71. Otherwise, I am cautiously Bearish for now.

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. A sustained break the will shows the way to retest 33.2, the low. But, a clear break of 100.62, the Key resistance, will indicate that the fall from 114.83 has completed after meeting missing 100% projection target. The corrective structure of such decline in turn augurs that the rise from 33.2 is still in progress for another high above 114.83. Stay tuned...

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Gold with HCM Custom Indicators
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Silver with HCM Custom Indicators

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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.