Commodity Update 19 August 2011

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Financial Spreads: Spread Betting and CFD Trading

UK Commodity Market Spread Betting: 18 August 2011

Gold was nowhere near finishing its rally, mainly encouraged by hedging demand as inflation scares made a comeback.

Not only the poor jobless figures from the UK, but the US's bigger than expected rise in producer prices added fuel to the fire that debt on both side of the Atlantic may be worse than thought. And to give it a last bit of support, rumours circled that Venezuela might nationalise its gold industry.

All of these factors helped the metal to finish at $1786.9, and carry on into today, up at $1796.6.

UK Commodity Market Spread Betting: 17 August 2011

Gold is up again at $1790 and near to the all time highs of last week, $1815.

No matter what the news gold always seems to be the beneficiary at the moment. As mentioned over and over again, the bulls have control no matter what the fundamentals seem to be. Until there is a sea change in sentiment, it is a brave man who stands in the way of the massively overriding momentum.

This is not to say that we have not seen some pretty violent reversals but they have usually been, for the last eight years, in 'buy the dips' territory.

UK Commodity Market Spread Betting: 16 August 2011

Gold remains the asset to own. As mentioned the trend has been accelerating in recent weeks and both Bulls, and future Bears, will be looking for a 'blow out' day soon to indicate a near term top.

As indices weaken, the money continues to pile into gold, the yen and the Swiss franc. At some point this will all go wrong so it would be unwise to 'bet the house' on it but while the impetus continues it is just as foolish to try to stand in the way.

UK Commodity Market Spread Betting: 15 August 2011

Gold remains everyone's favourite investment and whenever the markets look weak the price will rally sharply but at what point will we have gone too far?

When the world was a stable place gold was happily trading around $270 to $400 and we are now four to six times over this price. Has the number of dollars in the world quintupled over the last six years or the credit worthiness of the US/Eurozone/UK slumped by an equivalent fraction?

The answer is probably 'No'. That would indicate that 'at some point' the gold market will come under very bearish pressure.

The problem for the sellers though is that the 'at some point' moment is not here and now. It is still a bull market and will remain as such even if the price virtually halved.

Not only this, but the buying momentum has actually accelerated which has continued to put pressure on anyone rash enough to have sold. There is no single market where our financial spread betting clients have stuck with an opinion through a huge move like gold.

Financial Spreads clients have been long the precious metal for almost five years; no matter how high it goes the buyers remain in control. There is minor support at $1725/27 $1660/65 and at the $1600 level. Resistance, for what it's worth, is at $1750/52 $1777/79 and $1802/06.

UK Commodity Market Spread Betting: 12 August 2011

Gold fell yesterday as investors jumped out of the hedge after CME group's announcement that margin requirements were raised by 22% due to the higher volatility, not the higher prices.

Additionally, investors seemed to be taking profits from gold and investing them into riskier assets as risk taking sentiment returned.

With a bumpy session this morning though, could those risk takers be re-evaluating their decisions even with the assistance of the ban on short selling?

The crude oil spread betting market received a boost from the rebound in equity markets and better than expected initial jobless claims from the US.

This came a day after the Department of Energy released a bullish inventories report creating speculation about the demand in the energy sector picking up.

So the recent decline in prices looks like it was mainly caused by the lack of substance in economic data.

Maybe the bullish long term view means that investors aren't going to see the bears for much longer, thus scuppering any chance of us seeing cheaper prices at the pumps.

UK Commodity Market Spread Betting: 11 August 2011

Is the gold market lower this morning? It can't be. Well believe it or not it is, but by nothing serious in the scheme of things.

The precious metal is currently trading lower by $10 to $1784, but marked a new all time high above $1800 late last night.

The uptrend is still firmly intact but the higher gold goes the more it looks like a futures chart that is forming a huge spike. Such charts can often see a big move in the opposite direction so we'll have to wait and see if gold is the next big bubble.

UK Commodity Market Spread Betting: 10 August 2011

The gold spread trading market had a volatile session yesterday, rallying some six hundred points before giving back over half of those gains just as the equity markets recovered. It then recovered to test the highs straight after the FOMC, before finally ending up giving into the bears.

The move was a mirror image in fact and the daily candlestick formed a clear shooting star, which is considered a bearish signal in an uptrend, and there's no other market with more of an uptrend than gold.

Confirmation of a turnaround in the trend will have to be given in the coming days, but a break to the upside above yesterday's highs will likely confirm that the uptrend is still intact. Gold is at $1752 at the time of writing.

In line with the equities, crude oil prices rebounded from their lows but they were then slapped down after the FOMC, again before recovering.

Brent crude oil is currently at $104.75 at the time of writing and traders will want to watch out later in the day as inventory data is released this afternoon.

UK Commodity Market Spread Betting: 9 August 2011

Unlike the London riots though, market participants seemed to have a safety haven in the form of gold, protecting them from uncertainty, volatility, times of trouble and general bad news.

Investors yesterday saw an immense $59.7 gain to close at $1721.9. However, with traders pushing the hedging favourite up to $1772.0 in the early hours of this morning, the unrealistic level of $2000 doesn't seem so unrealistic anymore.

UK Commodity Market Spread Betting: 8 August 2011

You would never guess what's happened to gold. Ok, you probably have.

The news last night sparked a rally in the gold market and it hasn't stopped this morning, jumping $55 to a new record high at $1715.

It was the obvious choice for traders as soon as the S+P downgrade was announced and markets were open for business.

The precious metal is now up 21% for 2011. Goldman Sachs has raised its futures forecasts and is still recommending long positions in the commodity.

Brent has suffered along with equity markets, plummeting from the $120 mark to back below $110. At $106.80 this morning crude prices have also seen their fair share of volatility and so trading it isn't for the faint hearted.

By Simon Denham, 19 August 2011

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