The Overall Fundamentals
Precious Metals

PGMs shown last week, outperforming Gold and Silver as labor strike in South African mines remains a concern.

Anglo American Platinum (OTC PINK:AGPPY) was reported to have fired 12-K workers who refused to return to work Friday as the company attempted to contain the strikes which have spread to many parts of the country.

Strike against Lonmin (OTC PINK:LNMIY)ended as the company and the workers reached into an agreement of pay rise.

Labor actions have affect production. It is expected that Platinum production has declined to around 400-K ozs.

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Crude Oil

The front-month contract for WTI Crude Oil fell for the 3rd week running, accumulating loss of -10.5% following the rally to a 5-month high of 100.42 last month. The decline in prices was mainly driven by concerns over the demand outlook on deteriorating global economic prospect.

Brent Crude Oil slipped -0.33%, showing more resilience than the WTI benchmark as “helped” by delay of Forties cargoes and Nigeria supply disruption.

Crude Oil supply was mixed last week.

On the positive side, Iraq’s Crude Oil exports increased to 2.6-M BPD on average in September, the highest level since Y 1979, compared to 2.57-M BPD a month ago.

Iraq’s autonomous Kurdistan agreed to continue exports as the region and Iraq settled a payment dispute. Crude Oil export from Kurdistan rose to 170-K BDP and is expected to reach 200-K BPD right away.

In Russia, Crude Oil production last month reached a post-Soviet monthly high of 10.41-M BPD due in part to projects such as Sakhalin-2.

On the other side: cargo delays in the North Sea raised concerns over Crude Oil supply. It was reported that 3 more Forties crude cargoes for export in October are delayed and the total number of cargoes deferred reached 10 for the month. Longer-than-expected maintenance at the Buzzard Oil field and output reduction from other fields in the North Sea are the Key reasons for the delays.

Nat Gas

The DOE-EIA reported that natural gas inventory rose +77 bcf to 3 653 bcf in the week ended 28 September. Stocks were +272 bcf higher than the same period last year and +281 bcf above the 5-yr average of 3 372 bcf.

Baker Hughes reported that the number of Nat Gas rigs added +2 units to 437 in the week ended 5 October. Oil rigs decreased -12 units to 1 398 and miscellaneous rigs slipped -1 unit to 2 units and the total number of rigs slid -11 units to 1 837. Directionally oriented combined Oil, Gas, and Miscellaneous rigs rose +2 units to 194.

The Overall Technicals

Comex Gold (GC)

Gold edged higher to 1798.1 last week, and faced some resistance ahead of 1800 and retreated.

I will stay near term Neutral in here as consolidating trading will likely continue.

Note: as long as 1720, the minor support holds, current rise is expected to continue.

A clear break of 1792.7/1804.4 Resistance zone, will have larger Bullish implication and show the way to 1923.7, the historical high. A clear break of 1720 will signal near term “Reversal” and will turn my outlook Bearish for a move support at 1674 first.

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. Any downside falling leg should be contained by 1478.3/1577.4, the Key support zone, and bring on a rebound. A clear break of 1792.7/1804.4, the Key resistance zone, augurs the resumption of  the long term up-trend, and a new high above 1923.7.

The Long Term Picture: with 1478.3, the Key support intact, there is no change in my long term Bullish outlook for Gold. Some more medium term consolidation cannot be ruled out, I see the eventual break of 2000, the psych mark in view. Stay tuned…

Comex Gold Continuous Contract Daily Chart

Comex Silver (SI)

Silver moved higher to 35.445, but with no follow through buying. Silver turned back into consolidation mode. More sideway could likely be seen in near term below 35.445. But, another rise is favored to continue as long as 32.72, the Key support holds. A move above 35.445 will augur a move to  37.58, the Key resistance mark next. I am being cautious and on the look out for a Reversal signal at it approaches the 37.58 mark. Break of 32.72 will be the 1st sign of near term Reversal and will turn focus back to 30.195, the Key support.

The Big Picture: as long as 37.58, the Key resistance holds, price actions from 26.105 are seen 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. But, a clear break of 37.58 dampens this Bearish POV, and could bring stronger raise back to 49.82 high and beyond.

The Long Term Picture: the Bif 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 just a consolidation, and a break of 37.58, the Key resistance, will really increase the odds of a new high above 49.82. Stay tuned…

Comex Silver Continuous Contract Daily Chart

Nymex Crude Oil (CL)

Crude Oil fell to as low as 87.70 last week before recovering. The overall outlook is unchanged.

This fall from 100.42 is expected to continue to 61.8% Fibo retracement of 77.28 to 100.42 at 86.12 and possibly lower. But, I expect strong support ahead of 77.28 to contain any downside. A clear break of 93.33 turns the bias back to the Northside for a test on 100.42, the Key esistance. And, I expect another rise to 100.55 after completing the current consolidative price action.

The Big Picture:  this current development suggests that price actions from 114.83 are a triangle consolidation pattern. The fall from 100.42 is likely the 5th and final leg of such a consolidation. That said, any Southside should be contained above 77.28 and bring a Northside breakout sooner or later. A clear break of 110.55 suggests that whole rebound from 33.29 has resumed for a move for above 114.83.

The Long Term Picture: Crude Oil is in a long term consolidation pattern from 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 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 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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