COMEX Daily Technical Analysis Outlook

Posted: March 3, 2014 in Uncategorized
GOLD
 Gold remained relatively unchanged overnight, opening at the intraday high of 1332.75/1333.75. It declined steadily as a string of mostly positive U.S. economic data showed a rise in pending home sales and consumer spending. The S&P hit a record high as the metal continued its decline to close at the day’s low of 1320.50/1321.50. After the close, the metal moved higher following news that Russia landed troops at a military air base in Ukraine.
 Gold closed slightly lower this week at 1321, after three successive weeks higher. The weekly chart looks bullish, having formed a bottom at 1182 in December, and reaching an intra week high in the 1345 area. Support is at 1301-1308, which forms a Fibonacci convergence zone. The Fibonacci levels represent the 50% retracement of the 2008 to 2011 uptrend and the 50% retracement of the September to December downtrend (at 1308). Resistance is at 1361, the high from November 2013. RSI is confirming the trend higher, and the last signal in MACD in the weekly chart was a buy. Lastly, the Positive Directional Movement Index (DMI) line crossed bullishly through the Negative DMI line.
 Gold settled flat as U.S. equities climbed, but yellow metal still posted monthly gain as persistent concerns about a slowdown in the U.S. economy boosted prices.
 Data showed the U.S. government slashed its estimate for fourth-quarter economic growth in the latest sign of a loss of momentum
 Gold gained in February mostly due to signs of economic weakness in China and the United States as well as political and economic turmoil in Ukraine.
 SILVER
 Silver opened at the session high of 21.36/21.41, remaining mostly unchanged overnight. It followed gold’s decline to close at the session low of 21.20/21.25.
 Silver closed lower at 21.20, after three up weeks. There is a downtrend off the April 2011 high, which currently comes in at 22.33. RSI also failed just above resistance in the 53 area, currently at 50.78. We will need to see a break up through 22.33 to attract more buyers. Support is at the lows of the recent consolidation in the 18.80 level.
The gold-silver ratio is trading higher this week at 62.53, after making a false break lower through its trend line last week. The new, re-drawn uptrend currently comes in at 61.37. Resistance is at the recent high of 65.24.
Silver settled down after Federal Reserve Chairwoman Janet Yellen said the bank will continue tapering its monthly bond purchases
Prices seen pressure with investors opting for the riskier equity assets after a couple of encouraging economic data from the U.S. with consumer sentiment rising
Report showed the U.S. economy to have grown much less than initially indicated in the fourth quarter of 2013.
 COPPER
Copper settled down -0.55% as lingering concerns over the health of China’s economy and a weakening Chinese Yuan dampened sentiment. Investors were pondering improvement in the consumer confidence index and government officials’ remarks on the Ukraine crisis.
The US Commerce Department announced Friday that the 4Q GDP growth for the country was revised to 2.4% QoQ, lower than estimate and Q3’s growth. The figure raised speculations that the Fed may possibly suspend QE taper. In the euro zone, inflation remained stable, cooling expectation for monetary easing by the European Central Bank.
 In this context, the US dollar index fell to 79.772, help LME copper prices pare declines and finish at USD 7,012.3/mt, down USD 18.5/mt. In the US, GDP growth for Q4 2013 was revised down to 2.4%, missing the 2.5% forecast.
 In other vital news, political crisis in Ukraine continued to upgrade. Russia’s parliament has approved President Vladimir Putin’s request for Russian forces to be used in Ukraine “until the normalisation of the political situation in the country”.
 US President Barack Obama warned Russia that it should rethink its military intervention in Ukraine, and US government officials said Obama is considering not attending June’s G8 Summit in Sochi, Russia, and reassessing economic relations between US and Russia. In the week ahead, investors will be anticipating Friday’s U.S. nonfarm payrolls report for an indication of the strength of the recovery in the labor market and the future course of monetary policy.
 CRUDE
On the New York Mercantile Exchange, light sweet crude futures for delivery in April traded at 103.77, up 1.15%, on the risk of military conflict in the Ukraine and possibility of continued cold weather in the United States.
Last week, crude futures for April settled up 0.19%, or $0.19 cents, to end the week at $102.59 a barrel.
Oil’s gains came as the U.S. dollar fell to a three-month low against the euro on Friday after data showed that the annual rate of consumer inflation in the euro zone rose by a more-than-expected 0.8% in February, dampening speculation the European Central Bank will add to stimulus at its upcoming policy meeting.
 Meanwhile, forecasts for freezing temperatures across most parts of the central and northeast U.S. over the next couple of weeks boosted prices as well.
 Gains last week however were limited after the Commerce Department reported Friday that U.S. fourth quarter gross domestic product was revised down to an annual rate of 2.4%, from a preliminary estimate of 3.2%. Analysts had expected a downward revision to 2.5%.
 The disappointing data added to concerns that the economic recovery has lost momentum since the end of last year.
 Earlier in the week, Fed Chair Janet Yellen acknowledged recent weakness in U.S. data, saying it indicates softness in the economy.
 Crude oil prices gained in Asian trade on Monday as tension between Russia and the West over the Ukraine lifted risk assets broadly.
 Technical Levels
 
SUPPORT 1
SUPPORT 2
RESISTANCE 1
RESISTANCE 2
GOLD
1316
1318
1345
1354
SILVER
21.03
20.76
21.54
21.69
COPPE
3.2253
3.2121
3.2528
3.2670
CRUDE
101.94
101.29
103.10
104.26
Global Economic Data
TIME :IST
DATA
PRV
EXP
IMPACT
7.00P.M
Core PCE Price Index m/m
0.1%
0.1%
MEDIUM
7.00P.M
Personal Spending m/m
0.4%
0.2%
MEDIUM
8.30P.M
ISM Manufacturing PMI
51.3
52.3
STRONG
Core PCE Price Index m/m
Source Bureau of Economic Analysis(latest release)
Measures Change in the price of goods and services purchased by consumers, excluding food and energy;
Usual Effect Actual > Forecast = Good for currency;
Frequency Released monthly, about 30 days after the month ends;
Next Release Mar 28, 2014
FF Notes Differs from Core CPI in that it only measures goods and services targeted towards and consumed by individuals. Prices are weighted according to total expenditure per item which gives important insights into consumer spending behavior. This is rumored to be the Federal Reserve’s favorite inflation measure, but CPI is released about 15 days earlier and tends to garner most of the attention;
Acro Expand Personal Consumption Expenditures (PCE), Consumer Price Index (CPI);
Source Bureau of Economic Analysis(latest release)
Measures Change in the price of goods and services purchased by consumers, excluding food and energy;
Personal Spending m/m
Source
Bureau of Economic Analysis(latest release)
Measures
Change in the inflation-adjusted value of all expenditures by consumers;
Usual Effect
Actual > Forecast = Good for currency;
Frequency
Released monthly, about 30 days after the month ends;
Next Release
Mar 28, 2014
FF Notes
This is significant data, though it tends to have a relatively mild impact because Retail Sales, which also covers consumer spending, is released about 2 weeks earlier;
Why Traders
Care
Consumer spending accounts for a majority of overall economic activity. It’s one of the most important gauges of economic health due to the vast ripple effect consumer buying creates in the economy;
Also Called
Consumer Spending, Personal Consumption Expenditures;
ISM Manufacturing PMI
Source
Institute for Supply Management(latest release)
Measures
Level of a diffusion index based on surveyed purchasing managers in the manufacturing industry;
Usual Effect
Actual > Forecast = Good for currency;
Frequency
Released monthly, on the first business day after the month ends;
Next Release
Apr 1, 2014
FF Notes
Above 50.0 indicates industry expansion, below indicates contraction;
Why Traders
Care
It’s a leading indicator of economic health – businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company’s view of the economy;
Derived Via
Survey of about 400 purchasing managers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories;
Also Called
Manufacturing ISM Report On Business;
Acro Expand
The Institute for Supply Management (ISM), Purchasing Managers’ Index (PMI);
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