Gold, Silver and Oil trading

The Overall Fundamentals

Precious Metals

The Gold market saw an early sharp slide Friday that looked like an extension of the down trend bias from early last week.

That being the case, the concerns about the EuroZone were in place, even if Friday's higher US equity market action temporarily made investors and traders feel better.

On the other hand, adverse currency market action, and fears what might be seen from the EuroZone in the coming week, likely kept some bargain hunting buyers on the sidelines Friday. Also, consider that thin Holiday conditions resulted in some selling pressure going a long way in moving prices.

The Silver market avoided a definitive Southside breakout and extension even though trade remained on a state of high alert toward the situation in Europe.

Like Gold, Silver was undermined some as a result of ongoing Global recession fears, and also as a result of adverse currency market action.

In the end, thin Holiday type conditions result in a bigger than expected decline in Silver on a small amount of selling volume.

The Energies

According to the DOE/EIA, Iran is OPEC's 2nd largest Crude Oil producer and the World's 3rd largest exporter of Crude Oil. Last year, the Country exported 2.2-M BPD of total Crude Oil production of 3.7-M BPD.

Geographically, Asian countries recieved 60% of total exports with China alone taking 20%. The largest Crude Oil importer in Europe was Italy which purchased 10% of Iran's exports last year. France bought just 2% of the Country's shipments last year. This is why the EU stated that a Crude Oil ban would not affect the region's energy security.

Last week the Arab League threatened to sanction Syria financially should the Country not end bloodshed in 3 days.

France proposed establishing 'humanitarian corridors' for transportation of humanitarian supplies. While the French has not proposed military intervention, escort of humanitarian supplies would inevitably require armed protection.

While most of Syria's Crude Oil goes to Europe, the amount is insignificant and that is why European countries were not worried about worsening relationship with Syria.

On the other hand, supporting sanction of Syria is probably in favor of Saudi Arabia, the West's major Crude Oil exporter, and its Sunni ally Bahrain. Putting the focus on Syria would help lighten suppression in Bahrain.

Nat Gas recovered after falling to the lowest level in more than 1 yr last week. But, the outlook is still fragile despite the Winter heating season.

The DOE/EIA reported that Nat Gas inventory climbed +9 bcf to 3852 bcf in the week ended November 18th. The reading in the prior week was revised down to 3843 bcf. Stocks were +23 bcf higher than the same period last year but +233 bcf, or +6.4%, above the 5-year average of 3 619 bcf.

Baker Hughes reported that the number of Nat Gas rigs fell -6 units to 865 in the week ended November 25. Oil rigs added +5 units to 1130 and Miscellaneous rigs remained unchanged at 5 units, sending the total number of rigs to 2000 units. Directionally oriented combined Oil, Gas, and Miscellaneous rigs stayed flat at 213 units while Horizontal rigs increased +8 units to 1155 and Vertical slipped -9 units to 632 during the week.

The Overall Technicals

Precious Metals

Comex Gold (GC)

Gold's fall from 1804.4 extended to 1667.1 before forming a temporary low, and turning sideways.

The initial bias is Neutral for this week and some more sideway trading might be seen.

However, my near term outlook will stay Bearish Gold as long as 1736.6 support turned resistance holds.

Current action suggests that the rebound from 1535 has completed with 3 waves up to 1804.4. A break below 1667.1 will target a test of 1535, the Key support.

On the Upside: break of 1736.6 will turn the focus back toward 1804.4, the Key resistance.

The Big Picture: this action augurs that the correction from 1923.7 is going to extend with another decline IMO. But, there is no clear sign of long term trend reversal yet and price actions from 1923.7 could still unfold as correction-consolidation. So, while the fall from 1804.4 might extend lower, I will look for a reversal signal again inside 1478.3-1577.4 support Zone. A break above 1804.4 will target a test of 1923.7, the high.

The Long Term Picture: with 1478.3, the support intact, there is no change in the long term Bullish outlook in Gold. The will likely be some more medium term consolidation in here, and I still anticipate an eventual break of 2000, the psych mark, in the long term. Stay tuned...

Comex Gold Continuous Contract Monthly Chart

Comex Silver ( SI )

After moving down to 30.65, Silver formed a temporary low and recovered, the recovery was limited by the 4 hrs 55 EMA. So, the near term outlook remains Bearish and the decline from 35.7 is expected to continue.

A break below 30.65 targets 61.8% retracement of 26.15 to 25.70 at 29.80. A clear break there should show the way to 26.15, the support and below.

On the Upside : a break of 33.13 suggests that fall from 35.70 is possibly over and turn the bias back to the Northside for a retest this resistance.

The Big Picture: this action augurs that decline from 49.82 is not finished. But, I prefer to see sustained trading below 30, the psych mark, to add more credibility to this POV. If that happens, a deeper decline should be seen through 26.15 support towards 24.22, the long term fibo mark.

On the Upside: a break of 35.70 revives the case that correction from 49.82 has finished, and turns the outlook Bullish once again.

The Long Term Picture: the Big Q remains on whether 49.82 is a medium term or long term Top. The current action is starting to favor the latter. But, I prefer to see a sustained break of 61.8% retracement of 8.4 to 49.82 at 24.22 to confirm. Stay tuned...

Comex Silver Continuous Contract Monthly Chart

The Energies

Nymex Crude Oil ( CL )

Crude Oil's consolidation from 103.37, the short term Top, continued last week and deeper fall could still be seen with 100.15 minor resistance intact.

Nonetheless, the Southside is expected to be contained by 89.16/17 cluster support, 50% retracement of 74.95 to 103.37, and bring rebound.

On the Upside : a break above 100.15, the minor resistance, will turn the bias Neutral and bring on consolidations. But, a break of 103.37, the Key resistance, is needed to confirm the rally's resumption. Barring that, I am staying near term Neutral and expect more sideway trading in here.

The Big Picture: this current action indicates the fall from 114.83 finished at 74.95. The structure suggests it is merely a correction or part of a consolidation pattern. So, the rise from 33.2 is not finished. And as long as 89.16, the Key support holds, I favor a break of 114.83, the Key resistance, to resume the rally from 33.2.

Note : a clear break of 64.23, the Key support, is needed to confirm the completion of the rise from 33.2. Barring that I am staying Bullish Crude Oil.

The Long Term Picture: Crude Oil is in a long term consolidation pattern from 147.27, with the 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 Crude Oil could make another high above 114.83, I anticipate Strong resistance ahead of 147.24 to bring reversal for the 3rd leg of the consolidation pattern. Stay tuned...

Nymex Crude Oil Continuous Contract Monthly Chart

Nymex Natural Gas ( NG )

The Strong rebound from 3.285 and break of 3.479, the Key resistance, suggests that a short term bottom has formed, just ahead of 61.8% projection of 4.612 to 3.446 from 3.978 at 3.257 and 3.255, the Key support mark.

My initial bias is mildly on the Northside this week for further rebound towards 55-Days EMA, now at 3.679. But, I do expect Strong resistance from 3.978 to limit the upside.

On the Downside: a break below 3.415, the minor support, suggests that the recovery is done, and will turn bias back to the Southside for a retest of 3.285, the Key support.

The Big Picture : the price actions from 6.108 are treated as consolidation to medium term rebound from 2.409 low. The fall from 4.983 is treated as the 3rd leg of the consolidation, and will likely take out 3.255 support to 3.0, the psych mark, and possibly below. Strong support should be seen ahead of 2.409, the low, and bring reversal.

On the Upside : a move above 3.978, the Key resistance, is needed to be the 1st signal of reversal. Barring that my outlook on Nat Gas remains Bearish.

The Long Term Picture: 2.409 is still seen as an important bottom, and a rebound from there is at least treated as a medium term correction to down trend from the Y 2008 high of 13.694. Such a rebound is expected to extend further to 38.2% retracement of 13.694 to 2.409 at 6.72 at least. Stay tuned...

Nymex Natural Gas Continuous Contract Monthly Chart

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.

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

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

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