SPDR Gold Trust (
), NYSE:GLD, iShares Silver Trust (
), NYSE:SLV, United States Oil Fund LP (
The Overall Fundamentals for the week ending May 6, 2011
Commodities rebounded after a huge sell off in
European session Friday. Prices gained in the NY session on
US payroll data that beat expectations.
The USD rose against Japanese Yen and particularly commodity
currencies (AUD, NZD and CAD) on improved employment data.
It was impressive that Gold and other
commodities rose against USD's strength.
The Precious Metals rose along with the broad-based
recovery in the commodity sector. Despite the
recent weakness, Gold's decline was limited Friday.
Unlike other commodities, the precious Yellow metal held
above Thursday's low. With that action
I now believe the next objective is to
regain 1500, the psych mark.
The central banks are buying Gold. Mexico's central bank
said that it is buying Gold to get 'the best risk-return balance'
in investments'. Note that the recent performance in
Gold indicates that such investments do provide 'higher
return without much risk'.
The reaction of Gold's price today suggests to me that
recent Long liquidation in the metal is losing momentum.
The fact is that I am not worried about the correction
these days as reserve managers will probably use this as an
opportunity to accumulate Gold.
Silver is a different story. Silver failed at below
49.8, the Key resistance, reversed and fell to
close at 35.63. My initial bias is now to the downside this week
for a move to the medium term trendline support, now at 31.4, or
further to the 61.8% retracement of 14.65 to 49.82 at 28.085.
In the Crude Oil complex, the front-month contract for WTI
Crude Oil fell to 94.63, the lowest mark in over than 3
months, before bouncing back above 100 and fading to 97.17,
-2.62, the biggest weekly decline since Y 2008.
Brent Crude also fell with the Benchmark contract moving to as
low as 105.15 before reversing. The contract settled at 110.80, -
1.67 on the day.
In the US, the number of non-farm payrolls rose 244K in April,
following an upwardly revised 221K in the previous month. The
market had anticipated a ease to +190K addition.
The data was encouraging, but the jobless rate
climbed +0.2% to 9%, the 1st increase in 5 months. Stay
The Overall Technical Outlook
Comex Gold (GC)
Gold made a record high at 1577.4 last week and reversed
after tapping the medium term channel resistance.
The initial bias now is mildly on the Southside for this
week for 50% retracement of 1309.1 to 1577.4 at 1443.3.
On the Upside
: a clear break above 1505.5, the minor resistance, will
turn bias Neutral, and bring on a recovery. Nevertheless, any
upside should be capped below 1577.4, and bring on
another decline to extend the correction.
The Big Picture:
a short term Top was made at 1577.4 after Gold tapped
its medium term rising channel resistance. But, there is no
indication of long term trend reversal in here. Yes, a deeper
pull back could come on for a move back into
1309.1/1432.5, the Key support Zone. I anticipate
Strong support from medium term channel low, now at 1390, to
contain any downside, and bring on the up trend resumption
through 1600, the psych level, after consolidations.
any sustained trading below 1400 will raise the possibility of
a trend reversal, and turn focus back to 1309.1,Key support
The Long Term Picture:
rise from 681 is treated as resumption of the long term up trend
from the Y1999 low of 253. 100% projection of 253 to 1033.9 from
681 at 1462 has been met, but there is no sign of
a reversal yet. Sustained trading above 1462.6 may pave the
way towards 161.8% projection at 1945.6 in the longer term.
a clear break of 1309.1, Key support, will augur
that a medium term Top has formed and a correction from
1577.4 would then likely move to the 55 month EMA now
at 1033. Stay tuned...
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.