Comex Commodity Technical Outlook

GOLD

Gold moved higher overnight to open at 1235.00/1236.00. Shortly after open, it touched a low of 1227.25/1228.25 before surging to the day’s high of 1248.50/1249.50 on dollar weakness following weaker-than-expected U.S. jobs data with non-farm payrolls adding a meagre 74k jobs in December against the 196k forecasted by economists. The metal closed the day at 1247.00/1248.00.

Gold closed higher this week at 1247, the third up-week in a row. While the test of the major low at 1180 was encouraging last week, it is too early to call an end to the strong downtrend that has been in place since the high of 1921 in 2011. 

The 50% retracement of the rally from 2008 to 2011 provides resistance; this is at 1301. There is strong support at the 1180 low. We are inclined to think that this is simply a correction; and that we will retest the 1180 low and achieve the technical target of 1155 (61.8% retracement of the long-term rally). We would be stopped out of this view should gold rally past 1416, the last major high.

Gold rose after disappointing U.S. jobs data stirred speculation Fed will take a gradual approach to tapering its bond-buying stimulus this year.

U.S. nonfarm payrolls rose just 74,000 in December, the smallest increase since January 2011, while the unemployment rate fell to 6.7 percent

Dollar weakened fueling expectations for the Federal Reserve to trim its USD75 billion monthly bond-buying program at a slower pace than once expected.

Technical Levels

	S1	S2	R1	R2
GOLD	1232	1218	1254	1262

Commodity Contract S2 S1 R1 R2

SILVER

Silver edged higher overnight to open at 19.76/19.81. It briefly touched a low of 19.65/19.70 before reaching a high of 20.24/20.29 on the back of gold prior to concluding the session at 20.21/20.26.

Silver closed unchanged this week at 20.21 and has been trading sideways for the past six weeks. There is resistance from a downtrend that has been in place since August, which currently comes in at 20.85. Resistance from the larger downtrend, in place since the 2011 high of 49.79, comes in at 23.63. The trend remains bearish.

The gold-silver ratio is trading higher this week at 61.83. Support from the uptrend currently comes in at 60.18. There is resistance at 67.46, the last major high. The trend remains bullish.

Silver rose as investors recalibrated their expectations for Federal Reserve policy after a much weaker-than-expected reading on the U.S. labor market.

The Bureau of Labor Statistics reported earlier that the U.S. economy added 74,000 jobs in December, well below expectations for a 196,000 increase.

Fed asset purchases tend to weaken the dollar by suppressing long-term interest rates, thus making prices an attractive hedge.

Technical Levels

	S1	S2	R1	R2
SILVER	19.76	19.31	20.46	20.71

Commodity Contract S2 S1 R1 R2

COPPER

Comex, copper for March delivery jumped 1.29% on Friday to settle the week at USD3.341 a pound. Prices of the industrial metal lost 1.3% on Thursday to end at USD3.299 a pound. Comex copper prices shed 0.26% on the week.

China’s copper imports inched up 1.3 percent in December on a month earlier propped up by contracted shipments even as a cash crunch depressed spot purchases, but arrivals still fell 2.3 percent in 2013 due to lower term bookings of refined metal. China’s copper imports rose 29 percent to 441,291 tons last month from a year earlier, government data showed today. Total imports expanded 8.3 percent, while exports grew 4.3 percent. Stockpiles monitored by exchanges in London, New York and Shanghai are at the lowest since November 2012, with LME inventories dropping for a 46th day.

Copper rose as traders bet that an apparent slowdown in U.S. hiring could tweak Fed’s monetary policy and increase the appeal of industrial commodities.

China’s copper imports inched up 1.3% in December propped up by contracted shipments even as a cash crunch depressed spot purchases

Data showed China’s export growth weakened in December–raising concerns about metal demand if economic growth isn’t sustained.

Technical Levels

	S1	S2	R1	R2
COPPER	3.3051	3.2688	3.3621	3.3828

Commodity Contract S2 S1 R1 R2

CRUDE

The Fed’s stimulus program is viewed by many investors as a key driver in boosting the price of commodities as it tends to depress the value of the dollar.
On the New York Mercantile Exchange, light sweet crude futures for delivery in February rose 0.08% during Asian trading on Monday at USD93.02.
Nymex oil futures were likely to find support at USD91.24 a barrel, the low from January 9 and resistance at USD94.18 a barrel, the high from January 8. During the last week, U.S. crude futures, also known as West Texas Intermediate or WTI, lost 1.55%, the second consecutive weekly decline.

Crude oil pricecs rose during Asian trading on Monday after weaker-than-expected U.S. jobs data fanned speculation that the Federal Reserve will scale down its bond-buying program at a slower pace than previously anticipated.

Crudeoil settled flat recovering from lows on reports of production problems at a major U.K. oilfield stoked supply concerns.

China’s crude oil imports rose 13 percent in December from a year ago to a record 6.31 million barrels per day as two big refineries reopened.

Crude demand for this year could rebound slightly as new refineries open, though growth may be capped by a lack of momentum in the broader economy.

Technical Levels

	S1	S2	R1	R2
CRUDE	92.00	91.30	93.40	94.08

Commodity Contract S2 S1 R1 R2