COMMODITY: Overnight Technical Outlook

Posted: November 14, 2013 in Uncategorized
Technical Levels
SUPPORT 1 SUPPORT 2 RESISTANCE 1 RESISTANCE 2
GOLD 1261 1253 1279 1291
SILVER 20.28 20.12 20.01 21.17
COPPER 3.1338 3.1081 3.2038 3.2738
CRUDE 93.02 92.17 94.63 95.39
Commodity Contract S3 S2 S1 R1 R2 R3
 SILVER
Silver edged higher overnight to open at the day’s high of 20.78/20.83. It traded within range for most of the session before declining to a four-week low of 20.40/20.45 later in the afternoon prior to concluding the day at 20.45/20.50.
Silver closed lower today at 20.50, the 5th lower close in a row. Intraday, we breached the 20.49 low from October 15. The move opens up a retracement to 19.16, the low from August 2013. We are bearish silver so long as it is trading below resistance in the low 21’s.
The gold-silver ratio has shot higher in the past two sessions, currently trading at 61.84. Gold typically outperforms silver in a bear market. Resistance is at the most recent major high at 62.37. There is support from the daily uptrend, which currently comes in at 59.18.
Silver rose as weakness in rupee supported amid growing speculation the U.S. was moving closer to taking military action against Syria’s government.
An early end to stimulus could hurt precious metals by drawing investors away from non-interest-bearing assets.
Holdings at ishares silver trust gained by 44.99 tonnes to 10600.69 tonnes from 10555.70 tonnes.
GOLD
Gold moved higher overnight to open at 1276.50/1277.50. It immediately rose to a high of 1280.00/1281.00 as the dollar dropped and 10-year U.S. yields fell following mixed signals on the timing of tapering of the monetary stimulus program. The metal traded within range for most of the day before edging lower to close at the session low of 1268.50/1269.50.
Gold closed higher today at 1269. The risk is still for a full retracement back to the October low in the 1252 area. A breach of support at 1252 would open up the June low of 1180. We are bearish gold so long as it is trading below 1307.
Gold climbed to the Life time High as Rupee dropped and political tension over Syria increased demand for the precious metal as a store of value.
Western powers told the Syrian opposition to expect a strike against Syria President Bashar al-Assad’s forces within days.
SPDR Gold Trust, the world’s largest gold-backed ETF, said its holdings rose 0.10 percent, or 0.90 tonnes, to 921.03 tonne.
COPPER
On the Comex division of the New York Mercantile Exchange, copper futures for December delivery traded at USD3.191 a pound during European morning trade, down 1.35%.
Comex copper prices fell to a session low of USD3.186 a pound earlier, the weakest level since August 8.
The December contract settled 0.78% lower on Tuesday to end at USD3.234 a pound.
Copper prices were likely to find support at USD3.174 a pound, the low from August 8 and resistance at USD3.258 a pound, the high from November 12.
Copper futures tumbled to the lowest level since August on Wednesday, after a top-level Communist Party meeting disappointed investors and amid growing speculation the Federal Reserve will begin tapering its asset purchase program at its December policy meeting.
Copper crossed 500 mark as support seen due to weakness in rupee while a potential western strike on Syria made investor bets more cautious.
The economy of China is showing clear signs of stabilisation, helped by policy support and some improvement in global demand.
In the US, recent data on durable goods, single family home sales and business spending on capital goods have been disappointing.
CRUDE
On the New York Mercantile Exchange, light sweet crude futures for delivery in December traded at USD93.71, down 0.19%, in a range of 93.45 – 93.78.
Some traders expect that more refiners than estimated have curbed their crude processing amid seasonal maintenance work and that could bring in the data more bearish than forecast. The American Petroleum Institute, an industry group, overnight said crude oil stocks rose 600,000 barrels in the week.
Crude oil prices weakened in Asia on Thursday as some doubt is cast ahead of a weekly stocks report later in the day from the U.S. Energy Information Administration that is expected to show a drop in stocks to 994 million barrels from 1.577 billion.
Crude oil gained as tensions mounted in Syria, heightening geopolitical and crude oil supply risk in the Middle East.
Crude oil prices were also boosted as protesters stopped production at oil fields in Western Libya.
U.S. crude stocks rose last week while gasoline inventories declined and distillate stocks increased, API data showed.
 Global Economic Data
TIME DATA PRV EXP IMPACT
7.00 P.M Trade Balance -38.8B -38.7B STRONG
7.00 P.M Unemployment Claims 336K 331K STRONG
8.30 P.M Fed Chairperson-Designate Yellen Testifies STRONG
8.30 P.M Crude Oil Inventories 1.6M 0.7M MEDIUM
Trade Balance
FF Alert Release date delayed by 9 days due to the US government shutdown;
Source Bureau of Economic Analysis (latest release)
Measures Difference in value between imported and exported goods and services during the reported month;
Usual Effect Actual > Forecast = Good for currency;
Frequency Released monthly, about 35 days after the month ends;
Next Release Dec 4, 2013
FF Notes A positive number indicates that more goods and services were exported than imported;
Why Traders
Care
Export demand and currency demand are directly linked because foreigners must buy the domestic currency to pay for the nation’s exports. Export demand also impacts production and prices at domestic manufacturers;
Also Called International Trade;
Unemployment Claims
Source Department of Labor (latest release)
Measures The number of individuals who filed for unemployment insurance for the first time during the past week;
Usual Effect Actual < Forecast = Good for currency;
Frequency Released weekly, 5 days after the week ends;
Next Release Nov 21, 2013
FF Notes This is the nation’s earliest economic data. The market impact fluctuates from week to week – there tends to be more focus on the release when traders need to diagnose recent developments, or when the reading is at extremes;
Why Traders
Care
Although it’s generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions. Unemployment is also a major consideration for those steering the country’s monetary policy;
Also Called Jobless Claims, Initial Claims;
Fed Chairperson-Designate Yellen Testifies
FF Alert Text of the testimony was unexpectedly released 17 hours earlier than the speaking time listed;
Description Due to testify on monetary policy before the Senate Banking Committee, in Washington DC;
Source Federal Reserve (latest release)
Speaker Federal Reserve Chairperson-Designate Janet Yellen;
Usual Effect More hawkish than expected = Good for currency;
FF Notes The testimony usually comes in 2 parts: first she reads a prepared statement (a text version is made available on the Fed’s website at the start), then the committee will hold a question and answer session. Since the questions are not known beforehand they can make for some unscripted moments that lead to heavy market volatility;
Why Traders
Care
As the Chairperson-Designate of the central bank, volatility will likely be experienced during her speeches as traders attempt to predict her affect on the bank’s monetary policy;
Acro Expand Federal Reserve (Fed);

Crude Oil Inventories

Source Energy Information Administration (latest release)
Measures Change in the number of barrels of crude oil held in inventory by commercial firms during the past week;
Usual Effect No consistent effect – there are both inflationary and growth implications;
Frequency Released weekly, 4 days after the week ends;
Next Release Nov 20, 2013
FF Notes While this is a US indicator, it most affects the loonie due to Canada’s sizable energy sector;
Why Traders
Care
It influences the price of petroleum products which affects inflation, but also impacts growth as many industries rely on oil to produce goods;
Also Called Crude Stocks, Crude Levels;
Acro Expand Energy Information Administration (EIA);
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