COMEX Technical Analysis Outlook

Alex Gray

Publish date: Wed, 26 Mar 2014, 08:50 PM

GOLD

Gold remained unchanged overnight to open at 1309.00/1310.00. It dropped to a five-week low of 1305.00/1306.00 on expectations of an earlier-than-expected rise in U.S. interest rates underpinned by U.S. data that pointed to a strong gain in consumer confidence while new home sales came in on expectations.

The metal then climbed to a high of 1315.50/1316.50 on technical buying amidst speculation of potential economic sanctions by the West on Russia over the ongoing Ukrainian crisis. It closed the day flat at 1310.00/1311.00.

Gold found some stability today, closing at 1311, and right around a big technical level at 1312. This is the 38.2% retracement of the 2014 rally. Support is at 1296, the 200-day-moving average. If gold breaks that level we expect there will be stop-loss sellers. Resistance is at yesterday's high in the 1334 area.

Gold ended with losses as expectations of higher U.S. interest rates and a lack of physical buying weighed on prices.

U.S. consumer confidence surged to a six-year high in March and house prices increased solidly in January, positioning the economy for stronger growth

SPDR gold trust holding dropped by 2.70 tonnes i.e. 0.33% to 818.77 tonnes from 821.47 tonnes.

SILVER

Silver too remained relatively unchanged overnight, opening the session at 19.98/20.03. It dipped to a low of 19.91/19.96 before following gold to a high of 20.14/20.19. It concluded the session at 19.96/20.01.

Silver closed slightly lower today at 19.96 after yesterday's steep drop. The technical outlook looks bearish, and we expect a test of support at the base in the 18.83 level. Resistance is at yesterday's high of 20.31.

The gold-silver ratio made a small gain today, trading at 65.65. There is strong support at the uptrend at 62.95. Closer by, there is support at 65.02, the 76.4% retracement of the drop from 67.47 to 57.09. RSI has diverged, and has not made a new high to confirm the new high in the ratio. As noted yesterday, while the uptrend is .still intact, we may see some near-term weakness in the ratio.

Silver dropped as pressure seen after stronger-than-expected consumer confidence numbers and ongoing concerns rate hikes are possible in the U.S. next year

The Commerce Department said new home sales fell by the most in five months in February, indicating headwinds still face the housing sector.

Fed Chair Janet Yellen suggested that interest rates could rise six months after the Fed's bond-buying program ends.

COPPER

On the Comex division of the New York Mercantile Exchange, copper futures for May delivery rose to a session high of $2.994 a pound, the most since March 20.

Copper last traded at $2.979 a pound during European morning hours, up 1.15%, or 3.4 cents.

Prices lost 0.17%, or 0.5 cents on Monday to settle at 2.945 a pound. Futures were likely to find support at $2.921 a pound, the low from March 24 and resistance at $2.997 a pound, the high from March 19.

Data released on Monday showed that Chinese manufacturing activity deteriorated for a third successive month in March.

The weaker than expected data fuelled hopes Beijing will unveil fresh stimulus measures to combat slowing growth.

The industrial metal fell to $2.877 a pound on March 19, the lowest since July 2010, amid growing concerns over the health of China's economy.

The Asian nation is the world's largest copper consumer, accounting for almost 40% of world consumption last year.

Elsewhere on the Comex, gold for June delivery inched up 0.32%, or $4.20, to trade at $1,315.30 a troy ounce, while silver for May delivery added 0.35%, or 7.1 cents, to trade at $20.13 an ounce.

Investors looked ahead to key U.S. economic data later in the day for further indications on the strength of the economy and the future course of monetary policy.

The U.S. is to release report on house price inflation and consumer confidence, as well as official data on new home sales later Tuesday.

Copper prices rallied more than 1% on Tuesday, amid growing hopes that China will unveil fresh stimulus measures to boost slowing economic growth.

CRUDE

On the New York Mercantile Exchange, West Texas Intermediate crude oil for delivery in May traded at $99.31, up 0.10%, after hitting an overnight session low of $98.82 a barrel and a high of $100.22 a barrel.

Brent crude for May delivery, which gauges global oil prices, rose 18 cents, or 0.2%, to $106.99 a barrel on the ICE Futures Europe exchange on Tuesday.

Industry trade group the American Petroleum Institute said domestic crude stockpiles rose 6.3 million barrels last week, while gasoline stocks declined 2.8 million barrels, distillate stocks rose 0.3 million barrels and refinery runs were 86.8% of capacity.

The U.S. Department of Energy will release its own estimates on Wednesday.

Overnight, crude futures fell as investors remained spooked over soft Chinese output data released during the weekend, largely shrugging off robust U.S. consumer confidence data.

Crude falls on China output data, looks past U.S. confidence report

Soft Chinese factory data released over the weekend continued to water down oil prices on Tuesday.

China's HSBC Flash Purchasing Managers Index, the earliest indicator of the country's industrial activity, fell to an eight-month low of 48.1 in March from a final reading of 48.5 in February, defying expectations for a rise to 48.7.

Crude oil prices rose slightly in Asia on Wednesday on continued geopolitical tensions over the Ukraine, but ample U.S. industry inventory data tempered gains.

Technical Levels

	SUPPORT 1	SUPPORT 2	RESISTANCE 1	RESISTANCE 2
GOLD	1305	1299	1317.6	1324
SILVER	19.90	19.73	20.17	20.42
COPPER	2.0041	2.9628	3.0751	3.1048
CRUDE	98.57	97.96	100.02	100.86

Global Economic Data

TIME :IST	DATA	PRV	EXP	IMPACT
6.00P.M	Core Durable Goods Orders m/m	1.1%	0.3%	STRONG
6.00P.M	Durable Goods Orders m/m	-1.0%	1.1%	MEDIUM
8.00P.M	Crude Oil Inventories	5.9M	2.9M	MEDIUM

Core Durable Goods Orders m/m

Source	Census Bureau (latest release)
Measures	Change in the total value of new purchase orders placed with manufacturers for durable goods, excluding transportation items;
Usual Effect	Actual > Forecast = Good for currency;
Frequency	Released monthly, about 26 days after the month ends;
Next Release	Apr 24, 2014
FF Notes	Orders for aircraft are volatile and can severely distort the underlying trend. The Core data is therefore thought to be a better gauge of purchase order trends;
Why Traders Care	It's a leading indicator of production - rising purchase orders signal that manufacturers will increase activity as they work to fill the orders;
Also Called	Durable Goods Orders Ex Transportation;
Source	Census Bureau (latest release)

Durable Goods Orders m/m

Source	Census Bureau (latest release)
Measures	Change in the total value of new purchase orders placed with manufacturers for durable goods;
Usual Effect	Actual > Forecast = Good for currency;
Frequency	Released monthly, about 26 days after the month ends;
Next Release	Apr 24, 2014
FF Notes	This data is usually revised via the Factory Orders report released about a week later. Durable goods are defined as hard products having a life expectancy of more than 3 years, such as automobiles, computers, appliances, and airplanes;
Why Traders Care	It's a leading indicator of production - rising purchase orders signal that manufacturers will increase activity as they work to fill the orders;

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	Apr 2, 2014
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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