Encouraging macro-economic data and IMF’s up-grades on growth forecasts boosted commodities side by side with equities and risk-sensitive currencies.
Weekly Fundamental & Technical Outlook for Crude Oil and Gold +
Gold rose the most in 3 weeks on short covering and rising global demand
Gold futures on the COMEX Division of the New York Merc bounced and posted a 0.2% gain on the week, supported by short-covering, and Silver and Platinum followed.
The most active Gold contract for August delivery climbed US$13.7, or 1.1%, to close at US$1,209.8.
Euro ended a 3-day rally vs. USD on Friday, as investors are cautious about the near-term economic outlook, and took profits ahead of the weekend.
Gold jumped back above US$1,200 oz on the a resurgence of global demand for tangible assets and its safe-haven appeal.
Gold price lost nearly 4.0% last week, closing below US$1, 200 oz during the prior 3 sessions, and the metal tapped US$1,185 oz Wednesday, the lowest level for the most active contract since May 24. The lower price attracted buyers to come back to the Gold market Friday, short-covering and rising physical demand of Gold have offered the major support in the pit.
Sept Silver was up 20.1c, or 1.1%, to close at US$18.073 oz, October Platinum rose US$16.8, or 1.1%, to close at US$1,533.2 oz.
The Overall Gold Technical Outlook
Comex Gold (GC)
Gold tapped 1185 last week and recovered. The Initial bias is Neutral this week and some sideway trading might be seen. But do expect another fall as long as 1215.1 resistance holds.
A break below 1185 will target Key support level at 1166.
A break above 1215.1 will indicate that a short term bottom has formed and bring about a stronger rebound. However, I maintain that risk will remain clearly on the Southside as long as 1266.5 resistance holds.
The Big Picture: Gold’s rally from 1044.5 should have completed at 1266.5, and medium term rise from 681 might have finished with 5 waves up on the Bearish divergence condition in the daily MACD. Sustained trading below 55 days EMA, now at 1206.3, will affirm this case and likely bring deep correction to 1044.5 cluster support, that is a 38.2% retracement of 681 to 1266.5 at 1042.8 at least.
The Long Term Picture: I am proposing that 1266.5 is an important medium term top in Gold in here and now look for a healthy correction going forward. But, there is no indication of a reversal of the long term up-trend yet. That being the case now I will maintain the long term Bullish POV and expect up-trend from the Y 1999 low of 253 to continue to 100% projection of 253 to 1033.9 from 681 at 1462 level after completing the correction from 1266.5. Stay tuned…Paul A. Ebeling, Jnr. www.livetradignnews.com
Crude Oil above US$75 on US Crude stock drop
Crude Oil stocks fell by 4.96M bbl last week, a weekly Energy Information Administration report showed.
Crude Oil prices rose in tandem with equities markets, on solid earnings from Key retail chains, and after US Labor Department data on Thursday showed jobless claims fell more than expected last week, to their lowest level in two months.
US Crude Oil futures for August delivery settled at US$75.44 bbl up US$1.37. That makes the 2 day gains to US$3.46 bbl, a 4.8% rise, the biggest 2 day percentage gainer since June 9, 2010.
Prices rose as much as US$1.83 to US$75.90 bbl earlier, the highest intra-day price since June 30.
Brent Crude Oil settled up US$1.20, or 1.63%, at US$74.71 bbl.
Crude Oil prices in New York are still well below their 19 month high above US$87 reached in early May, although they have rebounded sharply from a trough below US$65 on May 20.
Some of the Bullish sentiment was tempered by EIA data that also showed US gasoline inventories unexpectedly rose by 1.32M bbl last week, although distillate fuel stocks rose a less-than-expected 321,000 bbl’s.
A tropical depression made landfall mid-morning in the southern tip of Texas, near the Mexican border, but the storm did not impact Crude Oil production as its path missed refineries and platforms.
Tropical storms can disrupt oil production in the Gulf of Mexico and force the closure of facilities used to import Crude Oil. The inventory draw reported by the EIA was in part spurred by Hurricane Alex, which last week battered northern Mexico.
Crude Oil inventories at the key U.S. Cushing, Oklahoma, crude oil hub fell 353,762 bbl’s in the week to July 6 to 38.9M bbl’s, figures from energy industry data provider Genscape showed Thursday.
The EIA said Cushing crude stocks fell by 184,000 bbl’s in the week to July 2.
Cushing is the delivery point of the NYMEX oil futures contracts, and when inventories are high it tends to weigh on the front months of the futures curve relative to the back.
On Wednesday, the EIA raised its Y 2010 world oil demand growth forecast by 60,000 bpd from its previous estimate. The EIA now expects Crude Oil demand to climb by 1.56M bpd in Y 2010 to 85.82 bpd.
The Overall Crude Oil Technical Outlook
Nymex Crude Oil (CL)
Crude Oil moved lower to 71.09 last week forming a short term bottom and recovered. We may see a further rise initially this week but I do expect the Northside to be limited by 79.38, the resistance, and resume the fall.
Now I still favor the case that the choppy recovery from 64.23 has completed at 79.38, and a break below 71.09 will target a retest of 64.23.
The Big Picture: The recovery off of 64.23 is treated as a correction to the fall from 87.15 and has possibly completed at 79.38. A break of 69.51 will augur that decline from 87.15 is likely resuming. This will also revive the Bearish case that the medium term rise from 33.2 completed at 87.15, just ahead of 50% retracement of 147.27 to 33.2 at 90.24. If that be the case, I see another fall to the 50% retracement of 33.2 to 87.15 at 60.18 at least.
The Long Term Picture: currently the action suggests that the rebound from 33.2 finished at 87.15, inside 76.77/90.24 fibo resistance zone as expected. My POV is that the fall from 87.15 would develop into the 3rd falling leg of the correction from 147.27 and then, I would anticipate an eventual break of the 33.2 low in the long term as such a correction extends. Stay tuned… —Paul A. Ebeling, Jnr. www.livetradingnews.com
