(IBTimes) - The Overall Fundamentals
Asia's leading source of economic research take a look at the
commodities market this week.
Gold rebounded for the 1st time in 4 days Friday as weak US
employment data pressures the "Greenback." But, the precious
Yellow metal has been trading in a range of around 1650 for more
than a month.
This trading pattern has been inline with that of the Euro
which has been range-bounded since the beginning of February.
It is believed that official sector buying has been supporting
prices as futures and ETF demand have dropped recently. Physical
demand also softened as China and Japan were on public holiday
and despite India's Gold festival.
WTI Crude Oil began its decline in the mid-week and picked up
the pace Thursday as the OPEC predicted that Crude Oil supply
will exceed demand this year and beyond.
The cartel indicated that current levels of Crude Oil prices
were too high, as driven by speculation.
The OPEC's secretariat general, Abdullah al-Badri, stated that
"There has been no shortage of Crude Oil in the market. Producers
have been able to meet consumer needs". The OPEC "also sees this
as being the case for the rest of Y 2012 and the foreseeable
future". He also added that "today the price continues to be
driven by excessive speculation". This triggered the sell-off
which was then exacerbated by the disappointing US payroll
Nat Gas rose for a 2nd week running, signaling a temporary
bottom formed 1.902 in mid-April. The DOE/EIA reported that Nat
Gas inventory increased +28 bcf to 2 576 bcf in the week ended 27
Stocks were +840 bcf above the same period last year and +857
bcf, or +49.8%, above the 5-yr average of 1719 bcf.
Baker Hughes reported that the number of Nat Gas rigs fell -7
units to 606 in the week ended 4 May. Oil rigs increased +27
units to 1 355 and miscellaneous rigs stayed unchanged at 4
units, sending the total number of rigs to 1 965 units.
Directionally oriented combined oil, gas, and miscellaneous rigs
slid -9 units to 234 while horizontal rigs increased +19 units to
1 158 and vertical rigs added +10 units to 573 during the
The Overall Technicals
Comex Gold (GC)
Gold's rebound was limited at 1672.3 and then fell to as low
as 1626.8. There is no change in POV that price actions from 1613
are unfolding as a consolidation pattern.
A Triangle is the likely scenario, and more choppy sideway
trading could be seen in side the converging range of
Stronger rebound is not likely, but even in case of a break of
1672.3, there is strong resistance from 50% retracement of 1792.7
to 1613 at 1702.9 to limit upside, and eventually a Southside
breakout is anticipated and a move below 1613 will extend the
fall from 1792.7 towards 1523.9 low.
The Big Picture, the price actions form 1923.7 high are seen
as a medium term consolidation pattern. Fall from 1792.7 is
viewed as 1 of the falling leg inside the pattern and should head
back to 1478.3/1577.4 support Zone. I expect strong support from
1478.3/1577.4, the support Zone to contain the Southside to
finish the consolidation and bring up trend resumption to another
high above 1923.7 sooner or later.
On the Upside: a clear break of 1702.9, the fibo resistance,
will augur that fall from 1792.7 is finished and turn focus back
to this resistance instead.
The Long Term Picture: with 1478.3 support intact, there is no
change in the long term Bullish outlook for Gold. While some more
medium term consolidation cannot be ruled out, I anticipate an
eventual break of 2000 psych mark in the long run. Stay
Comex Silver (
Silver's decline continued last week and reached 29.78. The
near term outlook is Bearish as long as 31.395 resistance holds.
Sustained trading below 30, the psych mark, should show the way
to 26.145 and lower.
The Big Picture: the price actions from 26.15 should be a
consolidation pattern only and completed with 3 waves to 37.48.
The fall from there is tentatively treated as resumption of the
medium term decline from 49.82 high and should extend through
26.145 to 61.8% retracement of 8.4 to 49.82 at 24.22 and below.
But a clear break of 31.395, the resistance, will dampen this POV
and turn focus back to 37.48.
The Long Term Picture: the Big Q remains on whether 49.82 is a
medium term or long term top. Current development favors the
latter. I would prefer to see sustained break of 61.8%
retracement of 8.4 to 49.82 at 24.22 to confirm that case.
Barring that, price actions from 49.82 could merely be developing
into a sideways pattern. Stay tuned...
Nymex Crude Oil (
Crude Oil's recovery was limited at 105.98 and subsequent
sharp decline drove it through 100.68, the Key support,
confirming resumption of the fall from 110.55.
A deeper decline is expected in the near term to 92.52, the
support, that is near the 50% retracement of 74.95 to 100.55 at
92.75. Some support might be seen 61.8% retracement at 88.55 to
bring consolidation, we will see.
The Big Picture: last week's sharp decline affirms the POV
that the price actions from 114.84 are developing into a 3 wave
consolidation pattern, the 3rd leg should have already started at
110.55. Deep fall should eventually be seen to 74.95 low and
possibly lowere. There will likely be strong support from 64.23
cluster level, 61.8% retracement of 33.20 to 114.83 at 64.23 and
bring another rise. I will be looking for reversal signal below
The Long Term Picture: Crude Oil is in a long term
consolidation pattern from 147.27, with 1st wave completed at
33.2. The corrective structure of the rise from 33.2 indicates
that it is the 2nd wave of the consolidation pattern. While it
could make another high above 114.83, I see strong resistance
ahead of 147.24 to bring reversal for the 3rd leg of the
consolidation pattern. Stay tuned...
Nymex Natural Gas (
Nat Gas's rebound extend further to as high as 2.385 before
turning sideway. Some consolidations could be seen in near term
1st. Any Southside of retreat should be contained by 2.15, the
minor support, and bring on another rise. A move above 2.385
should extend the rebound from 1.902 to 2.742 resistance and
above. But a move below 2.150 will turn bias back to the
Southside for retesting 1.902 low.
The Big Picture: the Bullish convergence condition in daily
MACD suggests that fall from 4.983 is completed at 1.902 and
stronger rebound will be seen. The rebound could reach as high as
38.2% retracement of 4.983 to 1.902 at 3.079. I will have to see
sustained break of 3.255 Support turned Resistance to indicate
completion of the down trend from 6.108. Barring that, there
could be another low below 1.902 eventually.
The Long Term Picture: the whole down trend from 13.694, the Y
2008 high, remains in progress, so is that from 15.78, the Y 2005
high. Monthly MACD's stay below Signal Line suggest that
Southside momentum is increasing. The Y 2002 low of 1.96 is
breached and some rebound should be seen, but another down trend
extension will push Nat Gas to 1999 low of 1.62. Stay
Paul A. Ebeling, Jnr.
Paul A. Ebeling, Jnr. writes and publishes The Red
Roadmaster's Technical Report on the US Major Market Indices, a
weekly, highly-regarded financial market letter, read by opinion
makers, business leaders and organizations around the world.
Paul A. Ebeling, Jnr has studied the global financial and
stock markets since 1984, following a successful business career
that included investment banking, and market and business
analysis. He is a specialist in equities/commodities, and an
accomplished chart reader who advises technicians with regard to
Major Indices Resistance/Support Levels.
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