Gold, Silver and Oil Trading

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SPDR Gold Trust ( ETF ), NYSE:GLD, iShares Silver Trust ( ETF ), NYSE:SLV, United States Oil Fund LP ( ETF ) NYSE:USO

The Overall Fundamentals

Risk appetite returned with both Crude Oil prices rising in European session. Currently trading at 109.7, the front-month contract for WTI Crude Oil gained for a 2nd straight day and fluctuated around a 3 day high.

The equivalent Brent Crude contract rose to as high as 123.15 after declining over the past 2 days.

Gold was resilient and made a clear break 1500, driven by Strong demand for USD alternatives.

The US Dollar Index fell for a 2nd straight day to as low as 74.475, a level not seen since November 2009. Weakness in USD is positive for Gold.

While threats of a rating down grade have pressured the "Greenback", S&P's report may result in speeding up a deal in the government. In this case, Gold may be weighed down.

The April BOE minutes unveiled that 3 members voted for a rate hike, and the rest favored leaving the Bank rate unchanged as it is yet to confirm whether the slowdown in growth had been temporary.

1 member, while voting for maintenance of interest rates, preferred to increase the size of the asset-purchase program by GBP50B+.

Policymakers believed 'the most likely near-term path of inflation would be higher than the Committee had thought at the time of the February Inflation Report'.

There is still 'a significant risk that inflation would exceed 5% in the near term'. Concerning economic growth, policymakers forecast GDP growth in Q-1 Y 2011 to be 'pushed down' by 'large falls in energy and construction output that were unlikely to be repeated'.

Meanwhile, 'the near-term prospects for consumption weakened during the month. Survey-based measures pointed to weak consumption of services in Q-1.

The volume of retail sales had been broadly flat for some months. And surveys of consumer confidence had remained far below their historic average levels'.

On net, the minutes remained "Dovish" and the central bank will probably leave the policy rate unchanged at 0.5% until Q-3 Y2011.

 

Gold and Silver

Spot gold rose to an all-time high of 1,505.70 oz. having risen almost 4% over the past 8 days. The precious Yellow metal is set for its 11th successive Quarterly gain, as it extended this week's record run on players hedging growing inflation risks, and bought into a broad commodities rally as the USD fell, aided in part by Monday's threat of a downgrade to the United States' AAA credit rating.

Silver rose above 45 oz for the 1st time since Y 1980, when the Hunt Brothers of Texas cornered the Silver market.

This action is a continuation of a longer-term move being driven by Worldwide monetary policies, and specifically in the United States by the Federal Reserves QE policy.
Mounting evidence of rising inflation in major Asian economies such as China and India were echoed in Latin America Wednesday, with Brazilian prices nearing a government ceiling and Mexico's yearly rate exceeding a Key target.

Crude Oil

Total Crude Oil and Petroleum products stocks declined for a 2nd week running, by -6.74 mmb to 1030.67 mmb in the week ended April 15.

The market anticipated a +1.60 mmb increase.

The Crude Oil stockpile dropped -2.32 mmb to 356.97 mmb during the week with draws seen in all of the 5 PADDs.

Cushing stocks also fell -0.77 mmb to 41.13 mmb. Utilization rate rose +1.1% to 82.5%.

Gasoline inventory fell -1.58 mmb to 208.10 mmb although demand slipped -1.30% to 9.06M bpd. Production rose +2.21% but was partly offset by a -4.05% drop in imports.

Distillate inventory declined -2.50 mmb to 148.34 mmb as demand rose +8.2% to 4.11M bpd. Rises in imports (+190.10%) and production (+2.64%) limited the inventory draw.

WTI Crude Oil broke above 110 after the report as reduction in Crude Oil and Fuel inventories beat expectations.

 

The Overall Technicals

Comex Gold (GC)

Gold rose to 1506.2 Wednesday and intra0day bias remains to the Northside for 100% projection of 1309.1 to 1445.7 from 1380.7 at 1517.3 next.

On the Downside: a clear below 1488.2, Key support, will indicate short term Topping, and bring retreat. Barring that my outlook is Bullish even in case of retreat.

The Big Picture: Gold's long term up-trend is in progress, and is regaining momentum. That said I will stay Bullish as long as 1380.7, Key support, holds and expect the current up-trend lead the way to 100% projection of 1155.6 to 1432.5 from 1309.1 at 1586 next. Stay tuned...

Comex Silver ( SI )

Silver's rally rose to 45.00, and intra-day bias is on the Northside for 161.8% projection of 17.735 to 31.275 from 26.30 at 48.208 next.

On the Downside: a clear break of 42.20, Key support, will indicate that a short term Top has formed, and bring on consolidations. Barring that, my outlook is Bullish even in case of retreat.

The Big Picture: the long term up-trend in Silver is in progress and is regaining momentum with at target of 50, the psych mark. A clear break of 36.74, Key support, is needed to be the 1st signal of medium term Topping. That said, my medium term outlook is Bullish. Stay tuned...

Nymex Crude Oil ( CL )

Intra-day bias in Crude Oil is Neutral as it is bounded in range above 105.31. With 110.24,the minor resistance, intact, a pull back from 113.46 could still extend lower. A clear break below 105.31 will bring another fall towards 55 days EMA now at 101.76.

But, strong support should be seen above 96.22, Key support, to resume the larger up-trend. A clear above 110.24, the minor resistance, will turn intra-day bias back to the orthside for retreating 113.46, Key resistance, first. A clear break there will target 100% projection of 33.2 to 83.95 from 64.23 at 114.98.

The Big Picture: the medium term rebound from 33.2 is in progress and a Stronger rise should be seen towards 100% projection of 33.2 to 83.95 from 64.23 at 114.98.

But, here is no change in my POV that this rally is the 2nd wave of the consolidation pattern from that started at 147.27, the Y 2008 high. So, again I will start looking for reversal signal again above 114.98 projection level, remember that a break of 96.22, Key support, is needed to indicate medium term Topping. Barring that my outlook is Bullish. Stay tuned...

 



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Commodities

Referenced Stocks: CL , ETF , SI

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