Commodity Update 17 February 2012

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Commodities Trading: 17 February 2012

Gold found some short term support at $1710, once again bouncing back to over $1720 and this morning is at $1731 as it enjoys the same strength that indices are seeing.

The precious metal has yet to break to new highs and doubts still remain about the recent rally but this morning's strength indicates that the bulls haven't given up the fight yet.

Targets to the upside are seen at $1737, $1742 and $1752 meanwhile support is seen at $1705 and $1692.

Commodities Trading: 16 February 2012

The gold market has also suffered a little from directionless trade. We've highlighted before that the recent inability to take out the highs around $1760 is starting to make some of the bulls nervous.

The fear is that this could be the beginning of a greater correction to the downside, into the sub $1700 region. This morning the yellow brick is some $10 softer at $1715.

Brent has bucked the trend of other risk assets after being assisted by the rhetoric coming out of Iran who are threatening to stop exports to Europe.

This saw the black stuff rally to above and beyond the $119 level, however this morning the bulls cannot prevent the risk aversion from affecting them as Brent currently trades lower at $118.55.

Commodities Trading: 15 February 2012

On the commodities markets, doubts that Greece will be able to uphold its side of the belt-tightening deal proved to be good resistance for gold yesterday, with investors searching for safety in the US dollar.

On one side of the see-saw is fear that the situation with Greece could still be contagious, and thus create liquidity problems in the market place. However, on the other side, if the European nation gets another break, investors could see the yellow brick resume its upwards trend.

Overall, gold lost $1.8 to close at $1720.5, but at time of writing the bulls seem to be heavier with the precious metal up at $1727.5.

Europe's biggest economy, Germany, posted a better than expected economic sentiment figure yesterday giving traders a boost of confidence and allowing them to ignore Moody's Investor Services downgrade on a number of Eurozone credit ratings.

This in turn provided good support for crude oil, which was also given a leg up as Israel accused Iran of attacks on its diplomats abroad.

Commodities Trading: 14 February 2012

The gold spread trading market is starting to look a little bit worrying for the bulls at the moment. Rallies are short lived and the yellow brick simply can't seem to get beyond its recent highs around $1760.

At $1715 this morning it seems to be finding a little bit of support for now but the key levels are seen at $1704 and $1692 to the downside being support with $1733 and $1742 to the upside being resistance.

Brent crude oil dipped in line with stock market futures yesterday, taking it back below $117, but this morning it is just testing that level as it trades at $116.90 at the time of writing.

The battle between bulls and bears is very fractious at the moment as the Iran issue continues to support the price, whereas the credit rating downgrades today keep a lid on the gains.

Commodities Trading: 13 February 2012

The bulls speculating on gold to rise were fighting a losing battle against the dollar during Friday's trading as investors cashed in on profits ahead of the weekend.

Another reason for the slump was the requirement to cover margin calls in the falling equity markets, meaning that traders were closing out of the precious metal to free up money.

No one will forget the lingering issue with Greece and this means that risk adverse participants have been pushed out to the sidelines while the volatility remains, despite gold being used as a hedge in previous times of trouble.

So by the end of the day, the yellow brick had shed $8.1 to close at $1721.3, which at time of writing has been reversed and now the level sits at $1731.1.

Much like gold, a higher US dollar combined with a lower equity market meant that crude oil struggled to make ground in Friday's session.

Adding to the fire was a lower revision in the global demand for oil in 2012 by the International Energy Agency, also mentioning that a loss on Iranian crude supplies can easily be replaced. Currently Brent sits at $117.67.

Commodities Trading: 10 February 2012

Gold has had a bit of a see saw action in the past couple of days. After testing $1760, down to $1720, up to $1750 and now back down to below $1720 this morning.

Over the short term a little concern for the bulls to see gold fail to make a higher high as the most recent bounce failed to take out the $1760 at two attempts, so are the bulls drying up?

It will be interesting to see how the action pans out today and whether support around $1710 to $1700 will hold, because if not we might see a drive lower towards $1680.

Commodities Trading: 09 February 2012

In the commodities CFD trading markets, gold recovered to the $1750 level and looked like it was going to head beyond its recent highs. However, its fuel just ran out and it dipped back to the mid $1720s.

This morning the yellow brick is at $1734 looking evenly poised as the bulls weigh up whether the momentum is there to lift it beyond the recent highs around $1760.

Brent had another strong day being lifted above $117. Slowly but surely the commodity is making its way back towards the highs of 2011 when we saw $125 a barrel, which is not a great sign for motorists or even the wider economy for that matter.

Commodities Trading: 08 February 2012

Gold enjoyed a strong bounce yesterday as it looks to be reversing recent weakness and turning what looked to be rather bearish near term signals back into bullish ones.

As yet another dip looks to have turned into a buying opportunity for the bulls the yellow brick is trading back at $1750 having reached a low at around $1710 yesterday.

The gold trading chart suggests that near term support and resistance are seen at $1735/30/25 and $1755/64/75 respectively.

Brent crude oil is looking pretty perky this morning as it puts on another 50 cents, taking it to near the $117 level which it was above towards the end of yesterday.

This morning Brent is at $116.70 and traders will be keeping a keen eye on those inventory numbers later today.

Commodities Trading: 07 February 2012

In the commodities futures markets, the bears seem so be outweighing the bulls on the gold see-saw and yesterday saw a further retracement in the precious metals price. Concerns over the Greek sovereign debt sent investors fleeing into the safety of the US dollar.

After a powerful rally in January, it seems that traders' worries have been grounded and the realisation that at any moment something nasty could materialise in the Eurozone means that we're seeing regular bouts of profit taking.

So by the end of yesterday's session, gold had lost $4.8 to close at $1720.1, which at the time of writing has been added back on with the yellow brick, trading back up at $1725.4.

Friday's strong rally could not be kept up yesterday and the optimism over heightened demand for US crude oil, on the back of increased jobs, was washed away.

On the other side, Brent posted a gain with a report of increased demand from Asia and also an embargo on Iranian oil pointed to concerns over supplies in Europe. This morning Brent trades at $115.85.

Commodities Trading: 06 February 2012

After the surprisingly better than expected US NFP figure, investors started banking their profits in gold and reinvesting into riskier assets, happy to ride the wave of optimism that was engulfing the markets.

Consequently, the precious metal lost $33.2, bringing it down to $1725.8 meaning that the week's gains were wiped off and thus changing the outlook to neutral.

At time of writing, the yellow brick trades down further still at $1724.9, in line with weaker equity markets and since the break below some near term technical levels, a few of the bulls are having their nerve tested.

The pessimistic views relating to the energy sector that had been rife in the markets were soon reversed on Friday after the US employment data came out.

The rise of 243k jobs was much higher than the expected figure of 150k, which pushed the unemployment rate lower to 8.3%, the best figure since February 2009.

This brought investors to the belief that demand will be raised and in turn, caused a hike in the price of a barrel of oil.

The Brent crude oil contracts for difference market got itself back above the $114 level but this morning it's struggling to hold onto that ground as it trades at $114.00.

By Simon Denham, 17 February 2012

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