Commodity Technical Analysis: Gold Probes Lows before Closing Near High of Day

Daily Bars

Chart Prepared by Jamie Saettele, CMT

Commodity Analysis: “Viewed in light of the 3 wave advance from 1672.50, the trend is lower.” Today’s breakdown confirms the bearish suspicions. Continue to look lower from the current levels towards a Fibonacci confluence, former resistance, and channel support that cluster near 1630.

Commodity Trading Strategy: The most bearish count is valid against 1703. Shorts against that level are warranted.

LEVELS: 1641 1673 1685 1711 1723 1727

Last Updated : 18 December 2012 at 23:55 IST

Ten words that have shaved off $22.65 from Gold and counting

 

Source :CNBC

Commodity Online
Gold is tumbling, so is silver on the Comex. The Republican Speaker John Boehner’s ‘Plan B’ that would extend the Bush tax cuts for those making up to $1 million has been rejected by the White House. This invoked sharp reaction from Brendan Buck, Boehner’s spokesperson.

" The White House's position defies common sense." Buck said

" After spending months saying we must ask for more from millionaires and billionaires, how can they reject a plan that does exactly that?" he added.

" By once again moving the goal posts,  the president is threatening every American family with higher taxes." he said referring to an outcome of failure in fiscal cliff talks the first set of pessimistic words uttered in days.

Going off the cliff would mean $600 billion in automated spending cuts and tax hikes taking effect in an indiscriminate way taxes to be paid would climb for every American family, irrespective of their incomes.

The ‘Buck-words’ have shaved off some bucks from gold and silver prices.

Gold on the Comex for February is down by 1.46% or $24.85 and was seen trading at 1673.35 as of 11.51 PM IST. Silver on the Comex for March delivery is down by 1.90% or $0.617 and was at $31.663.

But it has to be noted that fiscal cliff Plan B failure has not derailed Plan A.

Obama had made a 'brand new offer' to Republican Speaker John Boehner that would raise taxes by $1.2 trillion and cut $1.22 trillion in federal spending on Monday.

“Obama, whose definition has for months been taxpayers above the $250,000 threshold, traveled to $400,000 in his latest offer. Boehner was at $1 million, but could move down to $500,000.” CNBC.com said in a report.

" He (President Barack Obama) is not willing to accept a deal that doesn't ask enough of the very wealthiest in taxes and instead shifts the burden to the middle class and seniors," White House spokesman Jay Carney said in a statement iterating Obama’s position on Plan B.

" The president is hopeful that both sides can work out remaining differences and reach a solution so we don't miss the opportunity in front of us today." he added. 

Richard Russell - The Ring Of Fire, QE Forever & Gold

With continued volatility in global markets, the Godfather of newsletter writers, Richard Russell, writes about the acti... Read More

Last Updated : 17 December 2012 at 21:00 IST

Gold has potential to reach $2075, average $1840 in 2013: Saxo Bank

Source :Saxo Bank

By Ole Hansen, 

What has been the effect of the last FOMC meeting on commodities?
Commodities have generally been trading sideways following the FOMC meeting on December 12. The additional quantitative measures that were announced were in line with expectations. The surprise pegging of future decisions to inflation and the unemployment rate was a bit of a surprise and it initially removed some support for gold and silver. Since the meeting we have seen the dollar weakens and this should normally lend support to commodities priced in dollars but not this time. Primarily due to the concerns about the fiscal cliff in US which, if unresolved, could have a serious impact on global growth and demand for raw materials.

What has been the influence of the last OPEC meeting on December 12th on oil production and prices?
OPEC in their latest meeting decided on absolutely nothing. The production quota was left unchanged despite calls for a reduction and the secretary general was also left in his position as disagreements between the three major producers Saudi Arabia, Iran and Iraq. With the US shale oil bonanza continuing to surprise unity among the members are probably going to be more important than ever in years to come as their power will slowly erode. The near term impact however could be one of lower oil prices as the world is currently oversupplied and a delayed reduction in quotas will further increase this glut.

What will be the consequences of the US fiscal cliff on commodities?
A failure to find a workable solution on the US fiscal cliff could have a major impact on US and global growth in 2013 and as such could trigger a reduction in demand for raw materials which again would have an adverse impact on prices, especially energy and industrial metals.

Which commodities will be the losers and winners during Q1 2013?
Global economic growth in 2013 is not expected to pick up much traction so on that basis we prefer commodities with supply constraints or where the price is already close to cost floor. These themes should primarily support some grain products such as corn and soybeans while platinum and palladium should also receive support. Precious metals should benefit from continued quantitative easing while energy prices may find the only support coming from geopolitical uncertainties.

How do you see the evolution of the energy sector with the winter season in the United States and Europe?
The US is currently heading for the warmest winter on record and this is having an adverse impact on natural gas and heating oil prices as demand forecasts are lowered. With OPEC continuing to pump and with US production running at the highest level in almost 19 years plenty of supplies should ensure some subdued price action this winter with the price of Brent Crude expected to be range bound within a 105 to 110 range during most of the first quarter. The only dramatic change to this call could happen if the geopolitical tensions escalate, primarily with regard to Iran over the uncertainty regarding its nuclear intentions.

What about agriculture?
Inventory levels of key crops such as corn and soybeans enter 2013 at low levels and this should help keep the prices supported ahead of next year’s harvest. Currently next year’s crops are priced much lower than the current on the back of expectations of a bumper crop next summer as farmers will plant as much as possible in response to high prices. On this basis any (negative) change in the weather outlook could see new crop prices rally.

What about precious metals?
Calling a peak to the gold (and silver) bull markets are probably premature as record low interest rates, fear of currency debasement and eventually rising inflation will continue to support. We see the potential for gold reaching 2075 before weakening to trade the year at an average of 1840 USD/oz.

What commodity will be a safe haven in 2013?
Commodities with tight supplies should do well despite uncertainties about the economic outlook. Here we primarily think of precious



Ole S Hansen is Head of Commodity Strategy at Saxo Bank   

Last Updated : 17 December 2012 at 12:00 IST

Why Gold prices should not be predicted until after a Fiscal Cliff solution

Source :Commodity Online Editorial Desk

 

 

  By Rakesh Neelakandan

Many have taken to forecast the price of gold for next year. But the intellectual capital invested in this exercise can be pure waste of time and resources as long as the fiscal cliff talks reach a definitive turn: a make-or-break scenario which is reliable and can be settled down for once and for all.

First of all, I will tell you some fiction. This is not fiction per se, but a set of arguments that you may hear in the coming days. Historical representation of future can sometimes be termed fiction.

The fiction

Fiscal cliff or not, QE or not, gold is all set to climb new highs!

If the current slump in yellow metal is deterring you from going long on gold, then I would say you are missing the last bus headed for a gold rally destination. Because, gold may not be able to come down this low yet again as it would possibly be busy with a journey northward.

February may see a surge in gold prices as investors return with a refreshed mind either to take the bull by the horns or to take the bear by its claws. The year-end slump or December-effect is expected to get offset by the April-effect or new (financial) year surge.

At the end of the day, bulls are bulls!

The kicking in off QE4 can lend additional support to gold starting January. (December 31 and lo, Operation Twist is history!)

Also, the fiscal cliff talks--stalled by the unfortunate and deplorable Connecticut shooting incident in a school there--would be arrived at a consensus in January.

As news agencies report, it may sometimes not be possible for the President and his Republican counterpart for talks on fiscal cliff to arrive at a consensus this month. This was also predicted by the legendary investor Warren Buffet.

The problem is that, though the effect of going off the fiscal cliff would take time to take effect in a practical way, investors would be spooked by the general lack of consensus in US Congress and the possible recession.

This, in turn would see massive sell off in commodities and equities in January. Dollar may see a surge in investments in these months as there would be a short-term rush for US treasuries, the traditional safe haven.

At the end of the day sentiments are sentiments. But once the talks are re-started and US gains its feet back, by April, a surge in commodities, especially gold and silver can be expected.

The 'facts'

But things may not be this simple! Now I would outline the facts. These are not facts per se, but some fiction. Futuristic representation of facts may also be termed fiction:

If US goes off the fiscal cliff, that would hurt the world economy badly. And if the debt ceiling is not raised once again by the US Congress, it could be pretty much worse. As going of the cliff can trigger a recession, the Congress may find it to be an ample reason to resort to austerity. This would in-effect be a downward spiral not only for markets, but also for the world as whole. While going off the cliff could trigger a recession, its subsequent outcome and impacts are hidden in future.

The world economic system may possibly come to a grinding halt as Europe too would go down with America and the fickle recovery in Emerging Markets, including China would be derailed, further aggravating the crisis.

Are we seeing a global depression in the offing? Possibly...and the prospect is least exciting.

Killing a mocking bird

So, if somebody offers a price prediction for gold in the coming days for the said days, try to secure a shoot-at-sight order for him.

Predicting the price of gold for uncertain times is least reliable and chaotic times unheard of.

Latest Update

“The first real movement in the “fiscal cliff” talks began on Sunday, with Republican House Speaker John Boehner edging slightly closer to President Barack Obama’s key demands as they try to avert the steep tax hikes and spending cuts set to take effect unless Congress intervenes by 31 December”, Live Mint has reported. 

 

DR. FABER EXPLAINS & PREDICTS THE ECONOMY INFLATION US DOLLAR STOCKS GOLD & SILVER

" In a Negative Real Interest Environement Some Assets could go Ballistic on the upside. I think there is a lot of money on the sidelines.Read More »

 

Last Updated : 16 December 2012 at 12:00 IST

Silver may retain the most volatile price action among metals in 2013: Barclays

Commodiy Online
The industrially biased precious metals have taken gold’s cue and surrendered some of their recent gains.

Unsurprisingly, the weakest performer was silver. It lost over 3% as prices struggled to find downside support. The fundamental balance remains firmly in surplus, and Barclays expects it to stay bloated next year. Industrial demand for silver has softened throughout 2012, and the picture looks unlikely to firm in the coming months, thus exposing silver’s dependence on investor demand.

Silver ETP flows have turned negative over the past two months, with outflows exceeding 200 tonnes.

“In our view, silver is set to retain the most volatile price action among metals over the coming year.” the Bank said.

Alongside other markets, the precious metals initially rallied following the Fed’s decision to provide further monetary accommodation to support a recovery, and in line with Barclays economists’ expectations, the Fed converted Operation Twist to purchases of long–term Treasury securities at a rate of $45bn per month. This took the balance sheet expansion to a rate of $85bn per month and, in surprise, numerical thresholds were provided for its policy rate guidance.

Balance sheet expansion, concerns over currency debasement, inflationary fears and levels of sovereign debt have supported interest in gold as a hedge, safe haven and a hard asset. Thus, further expansion should maintain that positive backdrop.

However, gold prices only initially rallied above the $1720/oz mark, and thereafter quickly surrendered their gains following Fed Chairman’s Bernanke’s warning that the announced measures would not be sufficient to offset the effects of a potential cliff. 

 

In other precious metals, spot palladium rose 0.7 percent to $693.70, headed for a 0.3-percent fall from a week earlier, snapping a six-week winning streak.

Spot silver was up 0.3 percent to $32.62, rebounding from a near one-month low of $32.21 hit in the previous session. The metal was also headed for a third straight weekly fall, its longest stretch of weekly losses in nearly seven months.

Will  Nibiru  annihilate Earth on Friday? Scientists try (and fail) to calm fears.

watch video

The Queen of England Asks Economists – ‘Why Did Nobody Notice?’