SPDR Gold Trust (
), NYSE:GLD, iShares Silver Trust (
), NYSE:SLV, United States Oil Fund LP (
The Overall Fundamentals
The commodity market saw lots of volatility last week. A
number of factors sent prices diverging.
Early in the week, the IMF revised down its growth forecasts
for the US, Japan and the UK and left the Global GDP forecasts
The World lender warned that risks posed by disruptions in
Crude Oil production and spikes in Crude Oil prices on Global
economic growth are skewed to the Southside.
Its comments were voiced by the International Oil Agency (IEA)
that stated, "Crude Oil prices above 100 would hurt demand."
Crude Oil sold off earlier in the week, but recovered on a
report saying Saudi Arabia has cut its production this month,
reversing the outputs it increased to offset Libya's Crude Oil
supply in March.
After falling early last week in tandem with Crude Oil prices,
Gold reversed all its losses, and made new highs Thursday and
The benchmark Comex Gold contract rose to an all-time high of
1489.1 oz before closing at 1486 oz, + +0.81% on the week.
Lots of factors boosted the precious Yellow metal last week:
sovereign crisis in the European periphery, rising inflationary
pressures, weakness in the USD and ongoing tensions in the MENA
region. These events are expected to continue, and will support
Gold's up-trend IMO.
Silver took Gold's cue and rose too. The White metal continues
to outperform the Yellow one, taking the Gold/Silver ratio to
Investment demand remains Strong with retail purchase
particularly Strong. While I expect the Silver price to continue
to rise with its moniker as "Poor Mans Gold", weakness in
fundamentals may cause a sharp correction in prices anytime in
The complex got hammered last week on the back of tightening
worries in China. Apart from monetary policy, players are concern
about the demand outlook.
Recent FX measures in China have raised worries over import
financing too. On March 30, the State Administration of Foreign
) announced it would cut domestic financial institutions'
short-term overseas borrowing quotas from April 1.
It also reduces the net amount of RMB (Yuan) forward contracts
that some banks can sell to clients.
Meanwhile, China's regulator will strengthen the foreign
exchange administration of "entrepot" trade. If the income to be
settled or credited to the current account is higher than 20% of
the payment for the commodity imported, the company will have to
seek permission from local foreign exchange bureaus. This rule
may reduce import financing for some firms.
That said, the impact on imports should be short-lived IMO,
and will not change the Big Picture. The demand/supply outlook
for Copper, was and remains tight. Substantial supply shortage
will continue to support the Copper price.
Crude Oil fell early last week too, as the IMF warned of the
threats in Global economic slowdown by high commodity prices.
At the April World Economic Outlook (WEO), the World lender
stated that rising food and commodity prices pose 'a threat to
poor households, adding to social and economic tensions, notably
in the Middle East and North Africa (
While disruptions in Crude Oil production and rises in Crude
Oil prices to date will have 'only mild effects on economic
activity', risks are on the 'Southside' with 'falling spare Oil
The International Energy Agency (IEA) said in its monthly
report that Crude Oil prices above 100 bbl are detrimental to
Crude Oil prices were also pressured as 3 major Oil agencies
(EIA, IEA and OPEC) increased their forecasts on non-OPEC
supplies. Despite a recovery since the middle of the week, the
Crude Oil market recorded a small loss on the week.
Gasoline was an exception with the front-month Nymex contract
gaining some, by +0.87% to settle at 3.289.
The -7 mmb decline in the Gasoline stockpile in the week ended
Apr 8 was a Key price driver. While its normal for Gasoline
inventory to decline ahead of Summer, recent draws have been
The Gasoline inventory fell below last year's level and 5-yr
average in early and late March respectively.
Players may be amazed by this as US Gasoline demand growth has
been mild since the beginning of the year.
Demand slipped -1.33% in January, followed by an average
+0.48% increase in February and March.
Note: growth rates for February and March were calculated
using weekly data which are subject to revisions, usually
downward, in coming months.
It is suggested that a large volume of Gasoline went to Mexico
as well as some other Latin American countries including
Argentina and Brazil. According to the DOE/EIA, over 90% of the
exports are shipped from the US Gulf Coast and about 70% of the
exports go to Mexico.
The Overall Technicals
Comex Gold (GC)
Gold's up-trend extended to new record high of 1489.1 last
week and closed strong at 1487.1. My target of 61.8% projection
of 1155.6 to 1432.5 from 1309.1 at 1480.2 has been met.
My initial bias is tn the Northside this week for 1500, the
psych mark, 1st and then 100% projection of 1309.1 to 1445.7 from
1380.7 at 1517.3.
On the Downside: a clear break of 1445, Key support, is needed
to signal short term Topping. Barring that my outlook is Bullish
even if there is a pullback.
The Big Picture: Gold's long term up-trend is in progress, and
regaining momentum. That said, I will stay Bullish as long as
1380.7, Key support, holds, and again expect the current up-trend
to target 1500, the psych mark, next. Further acceleration will
lead the way to 100% projection of 1155.6 to 1432.5 from 1309.1
at 1586 IMO.
The Long Term Picture: the rise from 681 is treated as
resumption of the long term up-trend from the Y 1999 low of 253.
100% projection of 253 to 1033.9 from 681 at 1462 is already met,
and there is no sign of reversal in here. Continued strong
trading above 1462.6 possibly leads the way towards 161.8%
projection at 1945.6 in the longer term. Stay tuned...
Comex Silver (
Silver's up_trend extended further to 43.05 last week, just
below medium term projection target of 43.71. At this point,
there is no sign of a reversal.
My POV is Bullish, and sustained trading above 43.71 targets
161.8% projection of 17.735 to 31.275 from 26.30 at 48.208
The 4 hrs 55 EMA, now at 40.489, indicates that a short term
Top is formed, and should bring pull back to 39.70 support and
below I believe.
The Big Picture: the long term up-trend in Silver is still in
progress, and is regaining momentum. This rally will likely
extend towards 261.8% projection of 8.4 to 19.5 from 14.65 at
43.71. A clear break there targets 50, the psych mark, next, and
a clear break of 36.74, the Key support, is needed to be the 1st
signal of medium term Topping. Barring that, my medium term
outlook is Bullish on Silver
The Long Term Picture: Silver's up-trend from its Y 2001 low
of 4.01 is still in progress. I am staying Bullish as long as
21.44, Key resistance turned support, holds, and expect the
up-trend to extend further to 261.8% projection of 4.01, the Y
2001 low to 21.44, the Y 2008 high, from 8.4, the Y 2008 low, at
54.03. Stay tuned...
Nymex Crude Oil (
Crude Oil fell to 105.31 last week, but formed a temporary
bottom there, and recovered. My initial bias is Neutral this
week, and some sideway trading could be seen. With 110.24,the
minor resistance, intact, another fall could come on, and a move
below 105.31 will extend the correction from 113.46 lower
But, Strong support should be seen above 96.22, Key support,
to resume the larger up-trend. A break above 110.24, minor
resistance, will turn intra-day bias back to the Northside for
retreating 113.46 resistance 1st. A clear break there targets a
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, there is no change in my POV that this rally is the 2nd
wave of the consolidation pattern that started at 147.27, the Y
2008 high. So, I will start to look for reversal signal again
above 114.98 projection level. But, remember, a clear break of
96.22, Key support, is needed to indicate medium term Topping.
Barring that my outlook will is Bullish.
The Long Term Picture: Crude Oil is in a long term
consolidation pattern from 147.27, with the 1st wave completed at
33.2, 2nd wave unfolding. A clear break of 83.85, Key support,
confirms that the 2nd wave is finished, and the 3rd wave, a
downward one, will have begun. Stay tuned...