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Gold, Silver and Oil Trading Technical Report

The Overall Fundamentals

Gold and Silver

The precious metals complex advanced across the board with Gold and Silver outperforming PGMs.

Look at Gold, the metal consolidated within 1800-1850 for most of the week before a grim US employment situation helped the price to break out above the range.

This week comes various central bank meetings and I expect all of them to leave interest rates unchanged or reduced, as some market participants have factored in rate cuts in the RBA and the ECB.

I will retain my POV that Gold will be supported, as advanced economies will continue to keep interest rates low to boost growth.

Silver outperformed Gold although its rise was driven by the precious Yellow metal. Despite its weak fundamentals, Silver has gained +40.0% in the first 8 months of the year, compared with the 32.7% rise in Gold.

Silver tends to outperform gold while during contractionary phase, it under performs Gold.

This is logical because Silver has heavy industrial uses. Although the August ISM index surprisingly held above 50, the detailed report was not all that encouraging.

Some economists believe there's a good chance for the headline reading to fall below 50, thus signaling a contraction in the manufacturing sector in September.

If this is the case, Gold may perform better than Silver as we enter the final Quarter of the year.

Crude Oil

Crude Oil prices strengthened for most of the week as supported by the threat of a tropical storm in the Gulf of Mexico and increase in risk appetite on renewed speculations of the US Fed's QE-3.

Gains were pared later in the week as economic data signaled deterioration in US manufacturing activities and sluggishness in the job market.

The front-month contract for WTI Crude Oil advanced to a 1-month high of 89.90 Thursday before falling, and settling at 86.45 Friday, adding +1.27% during the week.

Brent Crude continued to track S&P 500′s path. The front-month contract climbed earlier in the week and rose to 115.36, also the highest level in a month, Thursday before the reversal.

The contract fell to as low as 111.36 before closing at 112.33 Friday, up +0.87% on the week.

The Overall Technicals

Comex Gold (GC)

Gold's rebound from 1705.4 extend to 1887.4 last week and looks to be accelerating.

The Initial bias remains on the Northside for a run 1917.9 high. A clear break there confirms the up-trend resumption, and targets 2000, the psych mark.

On the Downside: A break of 1815.5,the minor support, will turn the bias to the Southside towards 1705.4 to continue the consolidation from 1917.9.

The Big Picture: Gold's long term up-trend is intact and there is no signal of reversal yet. This action suggests that Gold will attempt to make a new record high above 1917.9 in near term possibly to 61.8% projection of 1478.3 to 1917.9 from 1705.4 at 1997.1. Once there I will be cautious and look for another near term reversal near to 2000, the psych mark, and that should bring on a longer consolidation. Nevertheless, I will not consider a medium term reversal possibly before sustained break of 55-Days EMA now standing at 1691.7

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 and there is no sign of Topping in here. This up_trend may now be targeting 161.8% projection of 253 to 1033.9 from 681 at 1945.6. And sustained trading above 2000, the psych mark should lead the way to 261.8% projection at 2727.2. Stay tuned...

Comex Silver ( SI )

Silver's rebound from 38.76 extended to 43.50 after some brief consolidations last week. The initial bias is on the Northside for a test of 44.275 first. A clear break there will resume the rally from 32.30 towards 49.82 high.

On the Downside: A break below 41.205, the minor support, turns the bias Neutral 1st and should bring on more consolidations.

The Big Picture: Silver's price actions from 49.82 are treated as a consolidation in the long term up-trend. The 1st leg from 49.82 has completed at 32.30. The rise from 32.30 is treated as the 2nd leg and might extend further. But I am looking for reversal signal as it approaches 49.82, and a break of 37.025 support will turn outlook Bearish for another falling leg to extend the consolidation. Barring clear break of 37.025, I will stay cautiously Bullish on Silver in near term.

The Long Term Picture: the steep sell off from 49.82 raises the possibility that long term up-trend from 4.01 is near to completion as it faced strong resistance from 261.8% projection of 4.01 to 21.44 from 8.4 at 54.032. It is still to early to confirm long term reversal in here, but an important top should be near, if not at already formed at 49.82. Upon confirmation of a reversal, Silver would likely fall towards 55 months EMA at 21.4. Stay tuned...

Nymex Crude Oil ( CL )

Crude Oil's recovery was limited at 89.90 last week. Despite breaking 89.61 support turned resistance briefly, it failed to keep above there and so, I an holding on to my Bearish outlook, and that the price actions from 75.71 are treated as consolidation in the decline from 114.83 only. With 4 hrs MACD staying below Signal line, the initial bias is Neutral this week. A clear break of 82.95, the minor support, suggests that such recovery is finished, and will turn the bias to the Southside for retesting 75.71, the Key support. But, sustained trading above 90, the psych mark, will dampen this POV, and turn focus back to 100.62, the Key resistance, instead.

The Big Picture: the medium term rebound from 33.2 is treated as the 2nd leg of consolidation pattern from 147.24 and should have finished at 114.83. This decline should target next Key cluster support at 64.23; 61.8% retracement of 33.2 to 114.83 at 64.38 next. A clear break there willshow the way to retest 33.2, the low. But, a break of 100.62, Key resistance, indicates that fall from 114.83 has completed after meeting missing 100% projection target. The corrective structure of such decline then argues that rise from 33.2 is still in progress for another high above 114.83, the Key resistance.

The Long Term Picture: Crude Oil is in a long term consolidation pattern from 147.27, with the 1st wave completed at 33.2, and the 2nd wave might be finished. Upon confirmation of medium term reversal, the 3rd wave of the pattern should have started for a retest of 33.2 low.

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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