Commentary: Thursday was another quiet day for gold, but prices did register a new intraday high at $1,315.95 before falling back to $1,308.35, down $1.50, or 0.11%, on the day. Gold ETF holdings inched to another record at 67.42 million troy ounces. The catalyst for gold’s decline will likely come endogenously, as day to day events in the broader financial markets are clearly not having an impact on the metal. Once investor appetite for gold reaches critical mass, that’s when the inevitable correction will ensue. But there is no telling how much higher prices can go before that happens. Short-term traders continue to do well by maintaining long positions, but remember to have an exit plan for when the trend turns.
Technical Outlook: Prices have paused to consolidate above the $1,300 figure just ahead of resistance marked by the top of a rising channel that has confined them over the past two weeks. Well-defined negative RSI divergence hints near-term bullish momentum may be fading, with a move through the channel bottom (now at $1,295.47) exposing initial support at $1,282.97. Channel top resistance lines up at $1,319.51.
Silver - $21.82 // $0.06 // 0.29%
Commentary: Silver fell $0.17, or 0.75%, on Thursday, as the metal gave back a small portion of recent gains, as well as a small portion of the metal’s outperformance versus gold. The gold/silver ratio rose back above 60, but remains at depressed levels. The ratio measures the relative performance of the two precious metals. A higher ratio indicates that gold is outperforming, while a lower ratio indicates that silver is outperforming.
Technical Outlook: Eight-hour charts reveal a bearish engulfing candlestick formation below resistance at the top of a rising channel that has guided prices higher through September, hinting a move lower from here. A break past the channel bottom (now at $21.37) clears the way for a decline to $20.90.
Commentary: Crude oil surged $2.11, or 2.71%, in Thursday’s session, a continuation of the move that began on Wednesday after US petroleum inventories showed a larger-than-expected decline. Prices are now at the highest level since early August, and poised to test the upper end of a range that has contained the commodity for over one year. But with prices now back above $80, upside is limited, though a gradual advance is likely. As long as the global economic recovery remains on track, the bias in crude oil will be higher, but ample supplies should keep oil from breaking out of its trading range until inventories begin to decline more substantially. Recall that total U.S. petroleum inventories are nearly 105 million barrels above the five-year average.
Technical Outlook: Bullish momentum has accelerated, with prices breaking above resistance at $78.04 to challenge the psychologically significant $80.00 figure. A break above the $80.04-$80.70 region exposes August’s swing high at $82.97. However, relative strength studies are at their most overbought since the last major top two months ago, hinting that a downswing may be approaching in the near term. In this event, sellers face their first barrier at $78.31, a resistance-turned-support level at the top of a rising channel established since mid-September.
