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The Commodities Corner

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Where Now, Mr. Dow?

Tue, Oct 20 2009, 15:00 GMT
by Andrei Pehar

fxKnight.com

 

Looking at a very long-term view of the Dow on the weekly chart, price reached a peak high on Oct 7th, 2007 at 14198.00 and reached a low on March 1st, 2009 at 6474.09.  As of this writing, the Dow is currently about half-way between the 38.2 and 50.0% retracement levels of this move.

On Oct. 2nd, 2009, price on the Dow hit the 38.2% level of the weekly Fib, and the 61.8% retracement level on the daily Fib at 9420.69

Last week price snapped to the 118% extension on the daily and bounced down.

The long-term targets to the upside would be the 10334.08 at the 50% level on the weekly Fib, and the daily 161.8 extension at 10483.90

Intermediate upside targets along the way would include the 127% daily Fib level at 10134.25 and the 138.2% level at 10224.25

The long-term target in a downside scenario would be a return to the 38.2 weekly Fib, and the 61.8 level of the daily at 9420.69

Support levels to watch along the way include 9917.29, 9727.65, and 9610.33

Published on  Tue, Oct 20 2009, 15:00 GMT

Gold Hits Key Level

Mon, Sep 14 2009, 14:18 GMT
by Andrei Pehar

fxKnight.com

Gold hit a double-top this week, touching a key level last reached during the week of February 15, 2009 and breaking the $1,000.00 mark for the for the third time in about a year and a half.

If price re-tests the 1007.33 level and it holds as support, gold could be headed to 1133.24 during 2010, with resistance on the way to keep an eye on at 1013.10 and 1038.60

If we move down from here, then the 38.2 Fibonacci level at about 882.00 has been the area price has previously found support, with likely shorter-term targets along the way at 971.85 and 930.59

Published on  Mon, Sep 14 2009, 14:18 GMT

What's Next for Gold

Thu, Jul 2 2009, 15:26 GMT
by Andrei Pehar

fxKnight.com

 
Gold is ending the week at a key support level.  If 929.39 continues to hold, we could see a rally week which takes us first to 958.60, and if that breaks possibly to re-test January’s high of 1005.98

If the 929.39 level is broken, we could see prices drop to 872-882 before it begins to recover.

Long-term, we remain bullish on gold, with an eventual target at 1129.96 Dollars per ounce.  But, before that target can come back into play, price needs to break 1005.98, and find some solid support at that level. 

Published on  Thu, Jul 2 2009, 15:26 GMT

New Lows for the Dow − Where is the Bottom?

Fri, Mar 6 2009, 10:42 GMT
by Andrei Pehar

fxKnight.com

The Dow Jones Industrial Average has taken another beating the past two months, dragged down primarily by some of its component companies, including: General Motors, Bank of America, Citigroup, and JP Morgan Chase.

This non-stop slide is part of the reason for the US Dollar’s new-found strength, as the sell-off in assets created by market uncertainty and also funds’ need to fulfill redemptions creates a big demand for cash.  And currencies respond to supply and demand just like any other commodity.

So where is the US market likely to find bottom?

The next key support level is waiting at 6556.  What happens when we get there will be critical.  If this support level holds, we could potentially see a bounce back up to 7030.  If not (and if it instead re-tests as resistance), then the coming weeks could take us down as far as 5788.

Published on  Fri, Mar 6 2009, 10:42 GMT

Crude Oil: A Key Level to Watch

Thu, Nov 20 2008, 01:43 GMT
by Andrei Pehar

fxKnight.com

One of the factors which has been center stage throughout this crisis is the price of crude.  High oil prices were initially blamed for the fall of the US stock market.  And yet, with oil trading at $52 a barrel, we find the Dow still hovering right around 7900.  The question on everyone’s mind… is what happens to the economy if oil should start to go back up?

Oil affects the cost of doing business for almost every company out there - whether they use plastics, or have to ship their product.  And it can also affect the movement of many currencies, especially the Japanese Yen (JPY) - since the island nation has extremely limited domestic production - and the Canadian Dollar (CAD), which has the world's second-largest reserves.

So where is the price of this important commodity headed next?

Currently, we are headed down towards a weekly pivot point at 52.17, which is expected to provide some support and potentially bounce us back up to re-test 55.28 as resistance.  What happens next will be critical.

If price breaks back above this key level, then we may see a consolidation period between 55.28 and 70.49 (with in-between levels of 58.68 and 63.19 to keep an eye on), depending upon the results of the next OPEC meeting in Cairo.

If instead 55.28 can hold as resistance, we may see further drops - if prices fall below $50, the next support is at 47.30 (with 39.70 and 33.56 below that).

Published on  Thu, Nov 20 2008, 01:43 GMT

The Long−term Outlook for Gold

Wed, Oct 15 2008, 16:04 GMT
by Andrei Pehar

fxKnight.com

Traditionally thought of as a safe-haven during periods of high inflation or market uncertainly, this shiny yellow metal has been moving by over $100 per ounce on some recent days.  But there's more to the story than just the recent market panics.

The day prior to the first "no" vote on the US bail-out package, gold made it's bottom at 736.18, a level projected nearly 2 months in advance by Fibonacci studies.  But besides the technical indicators, there is a genuine fundamental supply and demand issue unfolding.  The truth is most every bank, bullion, and coin dealer out there is out of stock.  And some have even ceased accepting waiting lists and back orders.  Try it yourself - just call one.

So in a period of growing demand amid uncertainty about both the markets and inflation, the supply is virtually non-existent.  Except perhaps on eBay, where will find some $10 silver coins selling for 25 to 30 Euros (and an ounce of gold for over $1000).  Considering the situation, perhaps eBay is a better market thermometer than the London spot fix rate?

So why isn't the rate rising sharply as a result?

The other half of the equation are all of the funds currently being forced to liquidate assets.  Those assets include gold and silver.  And when a fresh supply suddenly hits the markets, we see the dramatic one-day drops like we've been seeing.  A fund essentially waits for the best price they can get (often a technical level), then takes advantage of the selling opportunity.  The newly available gold is then quickly snatched up by the biggest bidders, creating the sudden reversals back to the upside.

The result has been the current range of 830.93 to 926.70.  If 852.52 continues to hold as resistance, then we may well see more selling.  After all, the funds are not quite finished liquidating yet.  The IMF has also been raising cash by selling roughly 1/5th of its gold reserves (about 400 tons worth) in small gradual amounts in order to avoid disrupting the markets.  Any further drops will likely find support in the form of eager buyers at 808.31 and 735.13

If we can get above 853.52 and that level successfully holds as support, then another run to 926.70 seems likely, with some sellers waiting at $900.  A break of these levels brings secondary targets into view at 1044.44 and 1117.22

Overall, it would not be surprising to see gold somewhere around $1250 to $1300 per ounce within the next 12 to 18 months ($15.99 for silver).  However the ride up there is likely to be anything but smooth.

Published on  Wed, Oct 15 2008, 16:04 GMT

How to Determine the Next Likely Direction for Oil

Fri, Sep 26 2008, 12:05 GMT
by Andrei Pehar

fxKnight.com

 
With all the turmoil in the markets, how to we get a clear sense of direction?  Well, for oil at least, there are two key numbers to watch:

If we finish this week with a close above 110.51, and manage to find some support at that level, then that future direction may well be up, which will not help the U.S. financial markets very much.  If such a scenario comes to pass, then the next likely resistance level is at 124.56

If instead trading takes us down below 99.16, then we may be headed to test support at 87.81 next.  We may also range in the 99.16 - 110.51 area for another week or two.


 

Published on  Fri, Sep 26 2008, 12:05 GMT

What a Financial Crisis Means for Gold

Fri, Sep 19 2008, 11:01 GMT
by Andrei Pehar

fxKnight.com

Gold, traditionally a safe haven in uncertain times and a hedge against inflation, has seen tremendous volatility the past few days.  The collapse of Fannie, Freddie, Lehman Brothers, AIG, and HBOS has sent investors ducking for cover, many of them turning to gold and causing prices to soar by more than $142 per ounce in a single day.

The announcement of a ban on the short-selling of financial stocks both in the UK and the US capped the rally just as dramatically, as investors needed access to capital to buy back into what they perceive to be a safer market.  The release of a plan to acquire the remaining bad mortgage debt left in the markets (about 1/2 trillion worth) should add further bullishness to the markets (and therefore perhaps more downward pressure on the precious metal), however other dangers still loom - namely Washington Mutual, Morgan Stanley, Goldman Sachs, declining home values, continued threat of recession or a global slowdown, rising unemployment, and a deficit which grows ever larger as a result of the recent bail-outs.

What does all this mean for the future price of gold?  While the long-term outlook remains bullish, what happens in the more immediate term depends largely on which side of 845.72 we finish this week's trading on.  A close below means that we will likely spend the following week testing support at 812.08, 795.26, or 774.33; meanwhile a close above would mean we're on our way back up to re-test resistance at 889.82 and 917.11

The daily 200 moving average is currently intersecting the 889.82 resistance level, and continued trading above this level may well indicate the start of a new rally.

Published on  Fri, Sep 19 2008, 11:01 GMT

Gold & Silver Both Hit Projected Targets

Fri, Sep 12 2008, 21:22 GMT
by Andrei Pehar

fxKnight.com

 
Gold and silver both hit the targets projected the prior month.

As trading closed for the week, gold was heading back up to re-test 774.33 as resistance.  If we cross (and stay) above this number in the coming week, then 730.23 was indeed our bottom and we should see the metal slowly recover some of its value in the months ahead.

Mostly likely we may range between 730.23 and 774.33 for some time, and if 730.23 fails to hold as support, then we could see another move down as low as 658.84



Silver, in the meantime, came to rest at exactly 10.63, and is currently working its way back up from there.  An interesting level to look for in the coming week is 11.05 - if that knocks price back down and 10.63 fails to hold as support, we could (eventually) see prices as low as 7.32

If price can manage to get above 11.05, then we may be in for a retracement back up to 12.68, with some moving averages likely providing resistance along the way.  Sustained trading above the 12.68 level would confirm that we have a bottom in silver as well as gold.

Published on  Fri, Sep 12 2008, 21:22 GMT

Dow Futures Take a Hit on Bad Economic Data

Fri, Sep 5 2008, 14:33 GMT
by Andrei Pehar

fxKnight.com

Today's employment data showed a loss of 84,000 jobs, an increase of 11,000 over last month.  This marks the 8th consecutive month of job losses in a row, not a good sign for the US economy.  The unemployment rate rose to 6.1%, a five-year high.

This news comes right on the back of yesterdays less-than-optimistic numbers:
http://www.fxstreet.com/fundamental/market-view/global-news-fundamentals/2008-09-04.html

The result sent Dow future tumbling another 100 points, following yesterday's decline of 344.65 points.  More importantly, the decline broke a key support level at 11363, which had been holding the bottom of the range on the Dow since mid-July. 
 
The next test for the Dow will be support at 10,814 - and what happens there may well determine the direction for the rest of 2008.  Either we will continue to range between 10,814 and 11,363, or if we fall below that level we could see a big drop down below the 10,000 mark to 9926, with support on the way at 10,396 and  and 10,186.

Of greatest concern is perhaps the fact that the two factors which were support to prevent a US recession (cheaper oil and a stronger US Dollar) are both here, and the Dow continues to fall despite of them.

On the positive side, if in the short-to-medium term we can get and stay above 11,363, perhaps due to some positive surprises in 3rd-quarter corporate earnings, then the potential increases for targets at 11,702, 11,977 and perhaps even as high as 12,251.  If PMI and productivity numbers can sustain their positivity, then there is a slight possibility that this scenario may yet come to pass.

Published on  Fri, Sep 5 2008, 14:33 GMT

Oil: The Gustav Factor

Fri, Aug 29 2008, 10:08 GMT
by Andrei Pehar

fxKnight.com

Hurricane Gustav is expected to hit the Gulf of Mexico (which contains roughly 1/5th of all US oil producing and refining facilities) late Monday or early Tuesday morning, with winds of at least 131 miles per hour.

How will this affect the price of oil?

In many ways, it already has.  People have had some time to digest the news, so the fear factor should already be priced in for the most part.  Even with this development, it could not sustain prices above the 120.43 level we were watching last week, largely due to the rally in both the Dow and the US Dollar.

What remains to be seen now is whether the storm hits or misses the facilities, how many of them, and how severe the damage is.  Many are still rebuilding after Katrina and Rita.  Royal Dutch Shell has already begun the evacuation of non-essential personnel from some of their platforms in the region.

If these events push price above the new resistance at 119.67, then most likely we will see a move up to 124.82 (additional resistance is at 128.99 if we clear the first target).  There is strong support at 11.33 and 110.31 – and if the effect of the storm is not as large as anticipated and we drop below these levels, then we could see a drop to 104.97, or perhaps 101.79

Published on  Fri, Aug 29 2008, 10:08 GMT

Oil Moving Back Up

Thu, Aug 21 2008, 20:30 GMT
by Andrei Pehar

fxKnight.com

2 weeks ago this column accurately called the bottom in oil - now Bear Sterns is predicting $147 a barrel by the end of this year.

Will we get there?

Perhaps.  But in order to do so, it first needs to remain above 120.43, and eventually clear resistance at 124.20 - even better if that level holds as the new support.

Published on  Thu, Aug 21 2008, 20:30 GMT

Bottom−fishing on Gold & Silver

Fri, Aug 15 2008, 14:18 GMT
by Andrei Pehar

fxKnight.com

Gold and silver have both been tumbling in recent weeks.  Is there a bottom in sight?  There are certainly some likely candidates.

For gold, 795.25 is currently resistance and 774.33 is support.  If support should give way, I expect to see a bottom, for now, at 730.23.  If the bulls come rushing in, then additional resistance is waiting at 812.08 and 845.72



Silver, on the other hand, may have already touched its bottom.  12.68 is the most likely place for it to settle, however some possibility exists for 11.68 or 10.63 below that.  Should it move to the upside, the most likely resistance levels are 13.94 and 15.99

Published on  Fri, Aug 15 2008, 14:18 GMT

Has Oil Hit Bottom?

Thu, Aug 7 2008, 13:25 GMT
by Andrei Pehar

fxKnight.com

Oil is well worth tracking because it has so much influence on both the Dow and the US Dollar (and therefore all the major currency pairs which cross it).  Fundamentally, the case is much stronger for oil heading up over the longer term, but where is it likely headed in the nearer term?

The daily chart for oil is beginning to trace a bullish divergence, and the weekly stochastics are showing signs of turning as well - all of this points to a potential bottom.  119.68 is a key level (or 120.000 from a psychological standpoint) and may help to determine the next direction, depending upon which side of it we continue to trade on in the days ahead.

If price continues to fall, it will most likely find support at either 116.34 or 109.04.  If we have truly found the bottom and price begins to rise from here, then resistance is expected at 123.73, 127.31 and 132.02.  And if price manages to break above the prior high of 147.26, then a scenario comes into play which could (eventually) see oil as high as 185.48.

Published on  Thu, Aug 7 2008, 13:25 GMT

Metals Cool, Looking for Support

Fri, Jul 18 2008, 11:44 GMT
by Andrei Pehar

fxKnight.com

Next report will be published on Friday, August 8th

The precious metals saw a cooling this week, due largely to the drop in oil prices and the strength that lended to the US Dollar and the Dow.

Gold just broke below support at 959.48, and may be on its way to test 946.35.  If the drop continues beyond that, then 929.13 is the next likely candidate for support.  If we resume moving up, then 974.22 and 991.43 are the most likely resistance.

Silver, meanwhile is comfortably resting at 18.39 support, with additional support just below at 18.18 in the form of the daily 21 exponential moving average.  If another drop comes, then 17.94 and 17.66 are the most likely support levels waiting to break the fall underneath.  18.73 and 18.91 remain resistance to the upside, though the primary target of 19.12 has already been reached.

Published on  Fri, Jul 18 2008, 11:44 GMT

Next Target for Gold, Key Level for Silver

Fri, Jul 11 2008, 11:18 GMT
by Andrei Pehar

fxKnight.com

Gold has hit our first target of  940.29, and is now on its way to our next target at 960.10 - if that level breaks a third target at 992.14 comes into play.  Support remains at 940.29 and 928.06



Oil, meanwhile, has found support at 136.50, precisely the level we called 2 weeks go.  Next resistance is at 150.00, and 140.00 remains support for now.

Silver is currently at a key level.  If it can break above 18.39 and then successfully test that level as support, we are looking at a target at 19.12, with 18.73 and 18.91 as resistance on the way.  If 18.39 continues to act as resistance, then support is waiting below at 17.94 and 17.66

Published on  Fri, Jul 11 2008, 11:18 GMT

Gold Cools After Hitting Target

Fri, Jul 4 2008, 20:38 GMT
by Andrei Pehar

fxKnight.com

Gold has hit our target of 940.29, and has since cooled a bit to 931.70.  Now support is waiting at 928.06, 922.25, 917.58, and 908.25.  If price manages to break above 940.29, then the next targets are currently waiting at 960.10, then 992.14.

Published on  Fri, Jul 4 2008, 20:38 GMT

Gold Rallies on Higher Oil, Lower Dollar

Fri, Jun 27 2008, 20:51 GMT
by Andrei Pehar

fxKnight.com

Gold started moving once again yesterday - largely in response to oil breaking the $140 mark and the resulting downward pressure on both the Dow and the US Dollar.

Current target is 940.29, with resistance in the way at 928.06.  If price should drop, we expect to find support at 922.25, 917.56, 908.25, and 896.01.

Published on  Fri, Jun 27 2008, 20:51 GMT

Corn Sets Another Record on Iowa Flooding

Fri, Jun 13 2008, 20:18 GMT
by Andrei Pehar

fxKnight.com

The Corner will be written back on 27th June

Corn set another record today as fields in the Midwest United States, the world's largest exporter, reported five times the normal moisture level.  Besides supply disruptions due to increased severe weather, the demand from ethanol continues to grow - currently approaching 1/3 of total crops.   U.S. corn stockpiles are expected to fall 53% to a 13-year low prior to the 2009 harvest.

Soybeans rose to the 3-month high as well, as the government released expectations that supply as a percentage of use will drop to a record low this year.

Published on  Fri, Jun 13 2008, 20:18 GMT

Gold on the Move Again

Fri, Jun 6 2008, 16:54 GMT
by Andrei Pehar

fxKnight.com

Gold seems to be heading into another rally, and which side of 895.01 we finish the week on could well determine its future direction.

Support is currently below at 892.54, 891.37, and 889.90

Resistance is waiting above at 899.00, 905.46 and 913.50

If all the resistance levels give way, then the next key level to watch is 934.60 - if this level fails to form a top and later becomes our new support, then a longer-term rally could erupt taking price (eventually) up as high as 989.85

 

Published on  Fri, Jun 6 2008, 16:54 GMT

Oil Off Its Highs, However Fundamentals Remain Bullish

Fri, May 30 2008, 20:59 GMT
by Andrei Pehar

fxKnight.com

Both the US Dollar and the Dow showed remarkable resilience despite more scary figures out this week from the oil sector.  Besides setting a new high above $136 last week, yesterday's inventory numbers showed yet another drop, this time by 8.8 million barrels (the previous month saw a decline of 5.4 million).

The GDP price index held steady at 2.6% for the quarter, meanwhile the preliminary GDP for the same period rose to 0.9%, up from 0.6% the prior quarter.  While many signs still point to a poor rate of growth for the overall US economy this year, there are also indications that the concern may slowly begin to shift from recession to inflation, as we've already seen in other parts of the world.

Where the danger comes in is that if consumers accept these prices, without changing their driving habits, then oil prices (as well as prices for other commodities) could well find support in their current drop and seek to find even higher highs in the not-too-distant future.

Published on  Fri, May 30 2008, 20:59 GMT

Gold & Silver Update

Fri, May 23 2008, 16:56 GMT
by Andrei Pehar

fxKnight.com

Gold hit our first target of 917.61, then went on to hit our secondary target at 934.70

Some cooling is now in order, however if 917.61 continues to hold as support then a third target at 962.36 may come into view.  If price breaks below 917.61, the next support is waiting at 907.04, then 899.54



Silver meanwhile has finally broken our of the range it has been in for several weeks.  Both of our targets at 17.76 and 18.22 have been hit.  A cooling phase is expected next, with 17.76 and 17.39 likely to be tested as support.  If price should break above 18.22, then 18.56 and 19.33 become the next likely targets.

Published on  Fri, May 23 2008, 16:56 GMT

Next Target for Gold

Fri, May 16 2008, 20:46 GMT
by Andrei Pehar

fxKnight.com

Gold surged today, as the US Dollar declined despite positive housing figures, due largely to higher oil prices and a failure by President Bush to secure an increase in output from Saudi Arabia (beyond the extra 300,000 barrels per day previously pledged).

Breaking up past its 200 moving average and staying firmly above both key support at 892.59 and also the $900 psychological number, gold is currently poised for a try at 917.61, with resistance in the way first at 907.04

Should the precious metal cool prior to its next rally, support is waiting at 898.01, 889.95, and 879.39

Published on  Fri, May 16 2008, 20:46 GMT

Gold Rising On Inflation Fears

Fri, May 9 2008, 20:44 GMT
by Andrei Pehar

fxKnight.com

Gold saw another rally this week as $126/barrel oil spurred fund managers to seek new hedges against inflation.  However 889.55 remains a solid resistance level for now.  If price manages to break above, the near-term target could be 905.35 - with additional resistance waiting at 892.82 and 896.85

A bearish divergence and turning stochastics on several timeframes suggest a period of cooling may set in before we see new highs.  Support is expected at 869.35, 865.10, and 860.85

Silver, in the meantime, is not straying much from either side of its weekly pivot at 16.54

Published on  Fri, May 9 2008, 20:44 GMT

Gold & Silver Update

Fri, May 2 2008, 18:50 GMT
by Andrei Pehar

fxKnight.com

Gold has broken through support at 872.45, and is now on its way to re-test it as resistance.  If it breaks, then the next likely resistance level is 898.35

If the lower support at 843.69 fails to hold, then the next support levels are 829.30, 811.41, and an eventual target at 773.69

Silver has just bounced up from a major support level at 15.77, created by the intersection of a Fib and its 200 moving average.  Next it is on its way to test resistance at 16.62, and if that breaks then 17.07

If price falls below 15.77 (and successfully re-tests it as resistance), then support levels at 15.35 and 14.82 come into play.

Published on  Fri, May 2 2008, 18:50 GMT

Gold: Short−Term & Long−Term Targets

Sun, Apr 27 2008, 23:17 GMT
by Andrei Pehar

fxKnight.com

Gold has reached its short-term target for shorts, 879.14 (161.8% Fibonacci extension, based upon a 50% retracement).  It is slowly creeping back up, but what happens next at 888.96 and 904.85 resistance levels is key.  Much also depends upon the news reports coming out of the US all this week, and which direction they take the Dollar.



If the US news continues to be negative, gold may well have found a bottom for now and may resume its upward movement.  If the news is positive, and if price bounces off of either resistance level, then a longer-term target of 854.99 may come into view, based upon a 38.2% Fibonacci retracement from a longer timeframe.

Published on  Sun, Apr 27 2008, 23:17 GMT

Gold Cools as Dollar Rallies

Fri, Apr 18 2008, 21:15 GMT
by Andrei Pehar

fxKnight.com

Gold prices cooled a little as the US Dollar rallied today, finally landing at 919.25 - a key support level.  If the week opens to further drops, the next support levels are 899.00, 882.70, and 862.45  If instead gold prices head back up, then resistance is likely waiting at 935.55, 955.80, and 972.10

Published on  Fri, Apr 18 2008, 21:15 GMT

Dollar Weakness Spurs Commodities

Fri, Apr 4 2008, 15:41 GMT
by Andrei Pehar

fxKnight.com

A weaker Dollar and increased demand moved copper to a new 1-month high, while bad weather in the US threatens to cut grain production and is pushing wheat higher.

The Dollar's slide is also felt in oil, where futures rose $2 per barrel today, and support at $100 now seems well established.  Heating oil and gasoline prices rose as well, due to refinery fires in California and Finland.

Labor unrest in Brazil and farm protests over a new tax in Argentina have helped soybean prices in the United States, the world's largest producer.

Published on  Fri, Apr 4 2008, 15:41 GMT

The Next Steps for Gold & Silver

Fri, Mar 28 2008, 10:48 GMT
by Andrei Pehar

fxKnight.com

After setting new record highs, both precious metals went through a cooling phase leaving everyone wondering what's next.  Both gold and silver are currently at key levels - which side of them they are trading on when the new week starts may give some insights as to what's coming next.

While it is difficult to predict the shorter-term swings in today's volatile markets with any degree of accuracy (long-term I remain bullsih on both), here are the key levels to be aware of for now:


Gold

The key level to watch is 950.00

Support below that is at:  937.82, 908.65, 879.48, 837.95
 
Resistance above is at:  973.91, 1032.35 (key), 1076.75, 1098.99, 1126.68, 1185.02 (key), 1279.45, 1432.22


Silver

Key level to watch here is 18.29  
 
Support if we drop below that is at:  17.39, 16.49 15.21
 
And resistance if we break above is at:  19.40, 21.20 (key), 22.57, 23.26, 24.11, 25.91 (key), 26.60

Published on  Fri, Mar 28 2008, 10:48 GMT

Red Hot Metals

Fri, Mar 14 2008, 14:48 GMT
by Andrei Pehar

fxKnight.com

Almost every metal on the market is posting gains and setting new highs...

Gold is trading above $1000 per ounce for the second day in a row as the US Dollar continues its decline.

Silver touched $20.86 per ounce today.

Platinum has been rising all week and is currently trading at $2100 per ounce, however is still  shy of its recent high of $2270.

Palladium has been moving in step with Platinum prices (currently trading at $510 per ounce), suggesting it is not yet ready to overtake its higher-priced cousin as the metal of choice in the auto industry.

Rhodium is trading in a range near its all-time high of $9335 per ounce, and seems to have solid support at these levels.

Tin has set a new record for the fourth consecutive day in a row, climbing 4.3% to $20,800 per ton.

Copper rises as exchange stockpiles fall 2.1% to 6-month low of 125,225 tons.

Nickel gained $550 and is currently trading at $32,700 per ton.

Lead climbed $39 to $3,139 per ton.

Zinc is unique in its drop, falling $4.50 to $2,625.50.

Published on  Fri, Mar 14 2008, 14:48 GMT

Commodities Cool After Setting New Highs − What's Next?

Fri, Mar 7 2008, 16:28 GMT
by Andrei Pehar

fxKnight.com

Almost every commodity has set new highs in the past week, and nearly all of them saw some declines going into the end of Friday's trading.  Not surprising with the jobs numbers which came out of the US.  A slowing economy spells lower demand.  So does this signal the end of their bull run?

Much depends upon the particular commodity and the situation which surrounds it.  Certainly most are currently over-bought, and some cooling is long overdue.  What will be important to watch is where some of these will find support in the coming days and weeks, and that will give us some ideas as to any new targets.  For others, changes in either supply or demand may indeed signal a longer-term cap to present rallies.

Here are some commodities currently making headlines:

Brazil's coffee crop may climb to 55 Million bags (up from 33.7 Million in 2007).  One bag = 60kg or 132 pounds.  Farmers are citing more rain and improvements in farming due to reinvestment of profits as the main reasons.

Soybeans are trading lower as China cancels orders for soybean oil, due to drops in price in domestic vegetable oil.  So far it is the biggest weekly loss since July 2005.

Oil has set a new record of $106.54, and for now seems to be holding at that level.  More importantly, 100 has now successfully demonstrated itself as the new key support level, clearing the way for further gains.  OPEC's refusal to increase production is assisting prices in maintaining their highs.  However a retracement of some sort is still expected, as the US jobs number signals a contracting economy, and oil consumption in the US is already down.

Corn has fallen the maximum allowed by the Chicago Board of Trade, primarily due to speculation that Ethenol may be losing popularity as an alternative fuel solution.  BMW's advances in hydrogen technology presented at the Geneva Auto Show and government's growing attention to rising food prices may all be factors.

Gold seems to be withdrawing quickly off its highs, meanwhile silver seems to be holding fairly steady for now, with 19.95 as a key support level to watch as a possible sign of further highs ahead.  Gold meanwhile just completed a major move from a 38% Fib up to the 138% Fib, and may now seek support at 967.04, 954.14, and if that breaks 928.35

Published on  Fri, Mar 7 2008, 16:28 GMT

When Will It End?

Fri, Feb 29 2008, 20:10 GMT
by Andrei Pehar

fxKnight.com

Both gold and silver went on to set new record highs this week, as did oil and just about every other commodity out there.  Is there an end in sight?  Let's identify some likely targets:
 
 
Gold
 
Gold just broke above the next key resistance level at 966.44, and may now come back down to re-test it as support.  If that test succeeds early on in the following week, then eventually it could go as high as 998.81 this leg.  And obviously at those levels $1000 per ounce becomes a likely target.
 
If it goes into a cooling phase, then we can expect to find support at 951.08 and 938.74
 

 
 
Silver
 
Silver, on the other hand just completed an extremely bold move.  It has overshot the 19.36 target, and went on to test the important $20 per ounce milestone.  Very likely it will now cool a bit and test 19.36 again as support before going further.
 

Published on  Fri, Feb 29 2008, 20:10 GMT

Gold & Silver Set New Records

Fri, Feb 22 2008, 00:21 GMT
by Andrei Pehar

fxKnight.com

Gold and silver both set new highs again this week, breaking the records they set just over a week ago.

Gold is currently off its high and showing signs that it may enter a period of consolidation or cooling the next couple of days.  Support levels are at 937.27 and 914.05, meanwhile if it can catch a second wind then the next resistance is at 948.88 and 962.37 above that (spot prices).

Silver still looks to have a bit of strength left in it, though is also due for a breath.  If it continues to rise then 18.43 is the next target.  To the downside, 17.73 and 17.39 are the key levels of support.

Other metals including platinum, palladium, and copper all set new highs this week as well.

Published on  Fri, Feb 22 2008, 00:21 GMT

Silver Encounters Cooling Period

Thu, Feb 14 2008, 11:31 GMT
by Andrei Pehar

fxKnight.com

Happy Valentine's Day!  In case you are on the market for rings or earrings today, here is a brief update on the silver situation:

Silver has indeed broken below the 17.39 support that we have had our eye on since the start of the week, and even went on to test the next support level at 17.12

We are presently above that level once again, however our 200 moving average, which previously acted as support, just tested successfully as resistance (see chart, below), so it could mean there are more lows for silver ahead.  This re-test is classic example of the "good bye kiss" chart pattern.



If price breaks below 17.12, we can expect to find the next support at 16.58 (spot prices).

To the upside, should the rally resume, the same resistance levels are still in effect: 17.39, 17.73 and ultimately 18.43
 
  
 

Published on  Thu, Feb 14 2008, 11:31 GMT

Will Silver Continue Its Shiny Streak?

Tue, Feb 12 2008, 16:11 GMT
by Andrei Pehar

fxKnight.com

Everyone is talking about $20 or even $25 silver - but is this the rally that will take us there?

While it is difficult to speculate out as far as $25 (this leg), the fundamentals and demand seem to be supporting this current rally, increasing chances that we will see 18.43 (spot), eventually. Looking at a Fibonacci pattern which has been developing since Dec. 14th of last year, we see that the most recent run up began at 13.58 and got us up as high as 16.58 before loosing steam. The retracement which followed took us down 50% (to 15.08), so therefore we can expect the extension that follows to last until 161.8%.

We have already cleared the prior high, so that certainly lends this current trend some credibility. Next resistance is expected at 17.73, and if price should begin to breathe to the downside, then we can expect to find support at 17.39, and again at 17.12

Prices trading too much below 16.58 would indicate that silver, for now, is taking a break.

Published on  Tue, Feb 12 2008, 16:11 GMT

Which Way Next for Gold?

Thu, Feb 7 2008, 15:37 GMT
by Andrei Pehar

fxKnight.com

Update: Looks like a new uptrend is indeed emerging. Now 914.05 Will be a key test.

There are certainly several interesting scenarios currently playing out in the metals markets. Gold, for example, just completed a long leg of a Fibonacci pattern, which started forming back around August 12th of 2007. After setting a high of 845.55 Dollars per ounce in early October, Gold retraced 38.2% to 767.77 in November. The most recent high was just over 923.44, which would complete the pattern right at the 138.2% Fib extension.

Now, normally the prevailing wisdom is to let commodities completing such a bold move have some time off to rest, to stay away when something is coming off its highs or making too much news. But gold is not your every day commodity. It is a resource with growing demand in several industries, and one with limited mining or supply capability. It is also the world's "default currency", especially in times of inflationary, economic, and political uncertainty. Adjusting the price of gold in the 1980's for inflation, we should in fact be near 2000 right now. There seems little question out there among analysts that we'll at least see 1000. But what no one seems to know is when.

Is gold about to enter a cooling period? Perhaps not. The thing that made the end of this last rally so interesting is that we overshot the 923.44 level, and in fact went on to touch 937.27 at the top. And the drop which followed found support much faster and higher than most of us anticipated. If we adjust our Fib to include the most recent high, our picture begins to look a little different:

On the adjusted Fib, our most recent retracement ended at 849.99, or 50%. This would suggest that price may (eventually) see a rally up to the 161.8% extension, or 993.77! That certainly puts us closer to the 1000 Dollar predictions, and sooner rather than later. It also makes the most recent high (at 118%) look more like a milestone rather than a top.

So... how does one play this developing scenario?

For starters, we need to see which side of the key 914.05 level price is going to favor in the days ahead. Zooming in closer, we find that gold has just crossed below its 200 moving average. This former support is currently re-tasting as resistance. Gold may reveal a bit about its future intentions by which side of 903.19 it continues to trade on. If it stays south, expect the cooling period to continue a little while longer. If it trades above 903.19 and goes on to break resistance at 914.05, then we could well have another rally on our hands.

Published on  Thu, Feb 7 2008, 15:37 GMT