Commodity Update 23 December 2011

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Commodities Trading: 22 December 2011

In commodities spread trading gold can't seem to maintain any traction above $1,600 as it's drifted sideways to slightly downwards in the past few sessions.

At $1,615 this morning, key levels to watch are $1,588 and $1,582 to the downside, with $1,641 and $1,650 to the upside.

Brent crude oil enjoyed a day of risk-on trade yesterday, not suffering the same fate as spread trading indices as it bashed through $106 and is now firmly back above $107 at $107.75.



Commodities Trading: 21 December 2011

Gold has seen a renewed interest as it made strong gains yesterday and is firmly back above $1600, trading at $1630 this morning.

The bulls seem to be back in town and any increase in the risk appetite that has built up recently could add further strength to the precious metal.



Commodities Trading: 20 December 2011

After breaking for air above the $1600.0 mark, gold found it hard to stay afloat and fell back at $1593.6, down $4.4 for the session.

Most of the downward pressure was supplied by the strengthening US dollar, but also the ECB's parrot-like rhetoric despite growing signs that markets are pricing in a return to recession.

Currently the yellow brick is trying to get that breath of air again and is trading at $1600.3.

Not surprisingly, the main driver in the energy sector was the instability seen in Asian markets yesterday, with the death of North Korea's leader Kim Jong Il.

It still only helped Brent crude oil gain 4 ticks to close at $103.80 for the day, but perhaps the meeting in Rome today will provide more direction. This will involve many nations, including the US and South Arabia, discussing sanctions on Iran's oil exports, potentially disrupting future Middle Eastern supplies.



Commodities Trading: 19 December 2011

The gold contracts for difference market suffered its fair share of weakness last week as it looked like the bulls had pretty much given up on the precious metal all together.

The yellow brick has bounced quite well from the mid $1500 area and is testing $1600 again this morning following a brief visit to that level on Friday.

For many this will present a huge buying opportunity, especially if some investors hadn't been on the band wagon in recent months or years.

It's still too early to say that the gold rush is over as there are many bulls out there still calling for $2000 plus prices. In addition even though gold is itself a risk asset, many people would rather hold that than US dollars. The yellow brick is at $1596 at the time of writing.



Commodities Trading: 16 December 2011

Holding a narrow range, the gold market managed to end the session with only a $3.6 loss, finishing at $1570.2 after touching a new recent low of $1560.1 earlier in the session.

It seems that EU officials are struggling to bring positive news to the markets and, with technical indicators showing that the bears are winning the battle, it's not looking pretty for the yellow brick.

At the time of writing though, there are still some bargain hunters left as the precious metal is trading up at $1590.1.

Crude oil prices started off by climbing higher, helped by signs that the US economy is still on the mend. These signs came in the form of those impressive initial jobless claims and rather optimistic manufacturing sentiment.

However, the price was not able to stay at a raised level for long as markets were flooded with further concerns over the European debt crisis and the black stuff crashed lower to the $103 area.

This morning though a few tentative buyers are pushing Brent higher with it trading up at $103.96.



Commodities Trading: 15 December 2011

Dragged down by the heavily slumping euro, investors saw gold drop to levels not seen since late September. The metal broke through the psychological support level of $1600.0 and didn't stop there as it carried on falling, ending the session down $57.4 bucks at $1573.7.

The reason for the third bearish day in a row was the worsening state of the European economy, pushing traders into the safety of the US dollar and out of commodities.

A few months back, risk adverse market participants would turn to gold as a hedge against turmoil, but the tables have surely turned and now any sign of a downturn and the yellow brick is dumped.

The next test is $1532.0, which will be the lowest level seen since early July, but at time of writing, the price is shying away from this level and is trading up at $1584.9.

As with gold, crude oil fell victim to the bears yesterday with investors finding sanctuary in the US dollar.

The decision from OPEC to raise their output ceiling to 30 million barrels didn't help the situation either, nor the US Department of Energy showing a bigger than expected build in gasoline stocks.

At time of writing, black gold is trying to rectify some of the damage and is trading up at $105.54.



Commodities Trading: 14 December 2011

Pressure on gold was given yesterday from a strengthening dollar and ongoing fears over an escalation in the European debt crisis.

Signs were also there that a number of economies were seeing lower inflation and, as gold is often used as a hedge against this, demand was reduced for the precious metal.

By the end of the session, the investors trading gold saw the metal lose $35 to $1630.9, a level that hasn't been seen since October 21st.

Crude investors ignored the rally in the US dollar yesterday and saw the price of the crude oil market rebound after rumours were circling that Iran had closed the Strait of Hornuz, the most important shipping channel.

Further support was provided by speculation that the Federal Reserve will be releasing a third bout of quantitative easing and this all helped Brent gain 190 ticks to close at $108.99. This morning Brent is trading at $108.70.



Commodities Trading: 13 December 2011

Gold traders were given a rude awakening in the early hours of yesterday morning when their gold price alerts were set off ringing.

The contracts for difference market dropped $20 within a matter of minutes and later on in the session the stronger dollar and weakening equity markets helped stretch out the loss. This came as investors' concerns were accentuated over a possible downgrade of the European sovereign debt from Moody's.

All in all, the precious metal shed $43.9 to close at $1666.8 and, at time of writing, the losses carry on, as gold trades at $1662.0.

The risk of a downturn in the European economy hasn't wilted away yet and crude oil traders are following the movements of EU leaders with the eyes of a hawk.

The general feeling appears to be that European officials did very little to avert that risk and so market watchers saw riskier assets like equities and commodities dumped. At time of writing, Brent has seen a small boost and is trading at $107.78.



Commodities Trading: 12 December 2011

Despite the bearish trader sentiment, gold isn't being seen as the safe haven it once was, but more of a traditional commodity.

It is down this morning at $1688, in line with other metals including copper, aluminium, zinc and nickel.

Meanwhile, the silver market analysis suggests that the metal has been following a bit of trend recently as every time it drops to the $31 level, it has seen a quick-fire recovery. This has been the case since mid November and, despite being dragged down by gold, this trend could continue.

Crude oil has had something of a pullback, which continues last week's decline, on the back of concerns over the Eurozone debt situation. This could prompt Iran to call for production cuts at OPEC's meeting this week.

Bearish speculation has ruled this morning, and we are seeing Brent trade lower at $107 and Nymex lower at $98. This sentiment may continue until the OPEC meeting on the 14th where we could get more on an indication as to plans for production.


By Simon Denham, 23 December 2011


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