The Overall Fundamentals
Gold and Silver
Gold futures on the COMEX Division of the New York Merc dipped Wednesday, as players expected continued improvement in the US economy, the rise in equities and USD also helped dampen Gold's appeal.The most active Gold contract for Feb delivery lost 8.2 oz, or 0.6%, to settle at 1332.1 on the day.
ADP Employer Services reported on Wednesday that private-sector jobs in the US rose by 187,000 in January, in comparison with economists' expectation of 143,000 jobs.
Besides, statistics showed that manufacturing in the US unexpectedly accelerated in January at the fastest pace in more than 6 yrs. European manufacturing also gained.
Players noted that the pick-up in employment and manufacturing added to the sense of economic optimism in the market, so Gold could come under some pressure as players take profits and move into other risk assets like equities and industrial metals
In addition, the strength in the US stock, and currency market lured players away from their defensive positions in Gold. Eased tension in Egypt also reduced the safe-heaven demands some.
Silver for Mar delivery fell 22.5c, or 0.79%, to 28.289 oz. and Apr Platinum dropped 4.4, or 0.24%, to 1828.6.
US Crude Oil futures rose Wednesday as conflicts in Egypt escalated.
The protests appeared to be escalating after the supporters and opponents of Egyptian President Hosni Mubarak scuffled. The worry about the supply of Oil helped push up the Oil price over the past few days.
Although Energy Information Administration reported US weekly Crude inventory rose 2.6M bbls onthe week ended January 28, Crude Oil price rose in late trading Wednesday.
Light, Sweet Crude for Mar delivery rose 9c to 90.86 bbl on the New York Merc.
The Overall Technicals
Comex Gold (GC)
Intra-day bias in Gold is Neutral in here, and just above 1309.1, the short term bottom. But in case of stronger recovery, I expect any upside to be limited by 61.8% retracement of 1424.4 to 1309.1 at 1380.4 and then bring a resumption in the decline.
On the Downside: a clear break below 1309.1 targets the 1155.6/1266.5 support Zone.
The Big Picture: this current development suggests to me that a medium term Top has set at 1432.5 after Gold failed two important projection targets, 161.8% projection of 931.3 to 1227.5 from 1044.5 at 1449.6 and 100% projection of 253 to 1033.9 from 681 at 1462.
Note: thet complete up-trend from 681, the Y 2008 low might have finished a 5 wave sequence as well. The fall from 1432.5 might now be headed towards 1044.5/1227.5, the Key support Zone.
On the Upside: a clear break of 1432.5 is needed to confirm the up-trend resumption. Otherwise, even in case of Strong rebound, I do expect another fall to extend the consolidation/correction Zone from 1432.5, the Top. Stay tuned...
Comex Silver (SI)
Silver's recovery from 26.30 is in progress, and a further rise might be seen in here. But, the upside is expected to be limited by 61.8% retracement of 31.275 to 26.30 at 29.375 and bring another fall. A break below 27.52, minor support, will turn the bias back to the downside to the medium term retracement level at 26.103 and deeper.
The Big Picture: note that the weekly MACD's break of Signal Line augurs that a medium term Top is in place. Touching and breaking of 38.2% retracement of 17.735 to 31.275 at 26.103 will confirm this, and a deeper correction should be seen to 24.98 support and below. I do expect downside will be contained by 22.84, the cluster support, 61.8% retracement of 17.735 to 31.275 at 22.907, and bring on a rebound.
On the Upside: a clear break of 31.275, the high, is needed to confirm the up-trend resumption. Barring that, I will stay Neutral Silver, and expect more consolidation/correction below 31.275. Stay tuned...
Nymex Crude Oil (CL)
Break of 90.87, the minor support, shows me that a temporary Top has formed at 92.84 in Crude Oil, and the intra-day bias is turned Neutral.
Some consolidations would be seen in here, but the downside is expected to be contained by 88.40, Key support, and bring another rise.
A clear break above 92.84 will extend the rise from 64.23 towards 100, the Key Psych level, next.
The Big Picture: the complete medium term rise from 33.2 is still in going on. This rally is treated as the 2nd wave of the consolidation pattern that started at 147.27, the Y 2008 high. 50% retracement of 147.27 to 33.2 at 90.24 has been met, and there is no sign of reversal in here. There could come a further rise could to 61.8% retracement at 103.70 and possibly higher.
On the Downside: break of 85.11, Key support, is needed to be the 1st sign of a medium term reversal and break of 64.23 is needed to confirm that action. Barring that, my outlook remains Bullish. Stay tuned...