Commodity Update 21 December 2012

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Financial Spreads: Spread Betting and CFD Trading

Commodities Trading: 19 December 2012

Gold prices plunged sharply yesterday, losing $27 to $1,670.4, on the back of growing expectations that US lawmakers are nearing a budget deal.

Analysis of the gold market suggests that the precious metal has now turned bearish over the medium-term as it broke below the lows of early November.

With the US starting to look like it might be able to apply some fiscal discipline, gold's short-term outlook also remains fairly unfavourable.

Amid optimistic comments by US politicians that the necessary legislation will be presented to Congress by the end of the week, crude oil investors continued to stay long.

The price of WTI crude advanced $0.49 to $88.41 and, with the US Department of Energy reporting its weekly stockpiles, we may get some extra hints about market direction later today.

Commodities Trading: 18 December 2012

Gold closed at $1,697.8 yesterday, slightly below the key resistance level of $1,700.

The precious metal has lost some of its safe haven shine as cautious investors watch the US law makers get closer to averting a fiscal disaster.

President Obama is seeking $1.2 trillion in tax hikes and is willing to agree $1.22 trillion is spending cuts. This morning, the price of gold remains fairly flat at $1,701.5.

Crude oil extended its rally yesterday for the third straight session on speculation that the world's biggest consumer will avert the fiscal cliff that could send the country back into recession.

However, it was a gain of just $0.61 to $87.95, which leaves the market within the same sideways range we have seen for more than two months.

Commodities Trading: 17 December 2012

In early commodities trade, both gold and silver are weakening, but gold's heavy support at $1,684/86 has yet to be challenged.

Below here, we have additional support at $1,672/74 but a breach of this might open the way towards the bear targets below $1,600.

On the upside, the resistance at $1,700/02 makes for a nice round number but above here the road gets quite congested in the $1,715/35 region.

Commodities Trading: 14 December 2012

In yesterday's commodities spread trading, gold saw its biggest fall of the week so far, with the same fears that time will run out for US politicians weighing on the precious metal.

The drop of $14.00, to just below the $1,700 mark, effectively cancelled out the anaemic gains seen over the last week.

The price of crude oil mirrored the falls in stock market indices, dropping $0.62 to $86.10, despite better-than-expected economic numbers from the US.

It seems that the fiscal cliff saga is the main focus for energy investors at the moment and the usual market movers are having less influence.

Not even anticipations of a rebound in Chinese oil demand could stop the sentiment turning negative.

Commodities Trading: 13 December 2012

Demand for gold was undoubtedly sparked from the weakened US dollar. With more asset purchasing by the Federal Reserve, investors sought the preferred safe haven of the precious metal.

Gold futures got to $1711.6 but profit taking followed rather quickly. Early this morning, gold plunged back below $1700.0. So back to square one and trading sideways around the current levels?

Crude oil climbed $1.06 yesterday to $86.73 after the International Energy Agency raised the demand forecast for next year on signs of a Chinese recovery.

With no intervention by OPEC, crude received extra support when the Fed expanded its asset buying plan.

Having said that, the US Department of Energy released its weekly inventories report showing a 0.8 million barrel rise versus expectations for 2.5 million barrel drop, that limited the advance of the crude oil spread betting market.

Commodities Trading: 12 December 2012

After a few positive sessions, gold was hit slightly as investors took profits ahead of tonight's Fed meeting.

The metal only fell $2.2 to $1710.2 which suggests that market participants are keen to find out the details of a possible monetary expansion before committing any further. A weaker dollar probably helped limit the slide.

OPEC is in no mood for changing the output target for crude oil, the organisation even expressed views that supply and demand are quite balanced.

That was not an incentive for crude investors to jump in ahead of the Fed meeting or the weekly inventories report. It was little surprise to see crude oil futures closing near flat at $85.71.

Commodities Trading: 11 December 2012

Renewed expectations for additional monetary support from the Federal Reserve did not go unnoticed by gold investors.

Demand for a wealth preservation asset pushed the precious metal $10.7 higher to $1,712.6.

The question remains whether the Fed will make a big enough change to move gold from the current sideways trend.

Crude oil prices initially appeared to be on a recovery path yesterday, largely on the resilience of the Chinese economy.

However, in the face of a lower US dollar, bearish investors took over and the slump resumed.

It remains to be seen whether the OPEC meeting in Vienna can be of any help, and the same goes for the FOMC meeting, rumoured to be in favour of more stimulus which usually supports commodities.

Commodities Trading: 10 December 2012

Gold endured some unexpected weakness last week but the metal is now putting on a better show as stability worries once again rear their head.

A glance at the recent price activity is slightly concerning though, the metal has experienced some heart-stopping drops in the last couple of weeks followed by weak attempts to recover.

There is very solid support under the $1,700 level down to $1,685 which has tempted the buyers but investors, as always, should be wary of sudden reversals.

We really need to get back above $1,719-21, and hold there, to give the bulls confidence again.

By Simon Denham, 21 December 2012

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