Commodity Update 25 November 2011

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Commodities Trading: 25 November 2011

Gold is also suffering from this bout of negative sentiment and ever since hedge fund supremo John Paulson started selling large chunks of his gold exposure the precious metal seems to have lost its shine.

At the time of writing the yellow brick is trading at $1,684 and near term support and resistance is seen at $1,680/67 and $1,712/25 respectively.

For the Brent crude oil market things have also been difficult for the bulls. This morning the black stuff is at $107.40 having spent the last few days hovering around these levels.

Near term support and resistance is seen around $106.85/$106.15 and $108.60/$109.40 respectively.



Commodities Trading: 24 November 2011

Gold furthered its recovery in early trading yesterday but, after breaking through Tuesday's highs, its strength weakened. Things soured for the bulls involved in the yellow brick, letting it fall $7.3 to close down at $1692.3 by the end of the day.

Once again, the US dollar triumphed as a safety haven over the precious metal, and with the market struggling to remain above the 40 day moving average for the past few sessions, the short term technical picture is looking bleak.

Currently, the gold market is trying to claw back some of yesterday's damage, and is sitting up at $1696.9.

On the commodity markets, crude oil suffered in the sell off on Wednesday as long positions were unwound ahead of today's Thanksgiving holiday.

Things weren't helped by the poor bond auction in Germany either, and this put pressure on black gold prices.

Crude oil would have fallen further if it wasn't for a report from the Department of Energy showing a much larger than expected crude draw. At the time of writing, Brent is trading up at $107.62.



Commodities Trading: 23 November 2011

Gold has done well to attract some buyers back having dipped below $1700 yesterday.

Yesterday saw considerable weakness in the precious metal as it reached a low of around $1665, but overnight the Asians helped to push it back above $1700 and this morning we're at $1702.

Things have also turned negative from a gold analysis point of view for the yellow brick as rallies don't last long. We can't rule out another test of the 200 day moving average which currently sits around $1600.



Commodities Trading: 22 November 2011

It could possibly have been looking at the bearish technicals, but investors yesterday seemed to realise that a challenge of the $1800.0 level for gold was growing ever more unlikely. This triggered a mass close out of long positions.

After dropping to $1666.1, the precious metal tried to claw back some of the losses, but the bulls were not as powerful as before and could only pull it up to close at $1676.8.

At time of writing though, they seem to be using all their force and have pushed the gold CFDs market to $1695.5.

Extra pressure was provided on crude oil in the form of a lack of agreement from the US on the budget deficit and coupled with the lingering concerns of the European debt crisis.

Market traders began unwinding their longs and washing out the weaker bulls. Eyes were on the weakening equity markets as well, which added weight to an already heavy energy sector.

At time of writing, not much has changed, with Brent only adding 70 ticks to $107.55.



Commodities Trading: 21 November 2011

With gold prices struggling to get above the $1800.0 mark, market bulls and bargain hunters found themselves getting their fingers burnt yet again on Friday.

It seems that before gathering enough momentum to breach this psychologically important level, a lot of the weaker long positions in the precious metal are going to find themselves washed out.

The yellow metal found itself hanging on for dear life on Friday, and closed the session with little gain at $1723.1, which at time of writing has been wiped off, as it sits at $1714.1.

The impressive rally that has been engulfing crude oil of late came to an end in Thursday's session and Friday gave investors a chance to catch their breath with not much happening.

At time of writing, the Brent contract is trading down slightly at $107.35. This has come as market traders ponder the impact of a slowdown in economic growth in Asia and the report from Japan that exports have seen a decline, both factors that add pressure to the price of black gold.



Commodities Trading: 18 November 2011

Gold has really burnt the fingers of some of our CFDs account holders as it saw a very sharp sell off yesterday taking the precious metal down to the $1720 area.

There was even a big gap lower of some 100 points and it looks like a bit of profit taking is creeping in following hedge fund legend Paulson's big liquidation of some big exposure he had to gold.

For now the yellow brick has found support around $1720 and is at $1727 at the time of writing.

The sell off in risk assets has also affected crude oil with Brent dipping below $110 yesterday as the weakness in gold rubbed off on oil markets. This morning Brent is at $108.85.



Commodities Trading: 17 November 2011

Fighting against the strengthening dollar, gold found it hard to make ground yesterday. Not only this but a US Labour Department report saw a 0.1% decline in consumer prices against September's figure, which accentuated the fact that gold was a needless hedge against inflation, thus reducing the demand for the yellow metal.

There was an interesting media report in yesterday's session though. Jon Paulson, one of the larger holders of gold ETF's, has just dumped a third of his stack, worth around $2 billion.

So by the close of business, the precious metal had slumped $17 dollars to $1763.3 and, at the time of writing, gold is pretty much flat at $1764.7.

The announcement that the Seaway pipeline will be reversed brought great optimism to the energy sector yesterday.

Investors piled into the crude oil CFDs market, as its thought that congestion formed at the Cushing, Oklahoma hub, will now be eased.

So for the first time in several months, the gap between the WTI and Brent contracts moved down into single digits. Currently Brent on the January future trades at $111.78.



Commodities Trading: 16 November 2011

On the other hand, the gold CFDs market has not proven to keep its safe haven status intact.

Usually you would expect the precious metal to be storming higher and testing at least the recent high around the $1800 level before an even greater push towards the all time high again.

However, this time the bounce we've seen in the past following a bout of weakness has not been forthcoming. At the time of writing gold is at $1771.



Commodities Trading: 15 November 2011

Eurozone members that have been worst hit by the debt crisis were subject to a political reshuffle yesterday, sending worrying investors into the safety of the US dollar and out of gold.

Reports have stated that current trading volumes are minute; the only people left in the markets seem to be short term speculators, with the long term holders taking a peripheral view for the time being.

So all in all, yesterday's session saw the yellow brick lose $7.5 to close at $1779.8, which at time of writing has been extended down to $1770.1.

Despite the changes in Greece and Italy's political system, showing a want for reduction of the current deficits, crude oil pulled back from the recent highs as the bears took hold of the session yesterday.

Not only did the persistent concerns on the European debt crisis keep downward pressure on the price of black gold, but also the strengthening dollar. At time of writing this pressure has been eased somewhat as Brent trades higher at $112.05.



Commodities Trading: 14 November 2011

The gold CFD market was in favour on Friday as the fear of Italy joining Greece in the cess pit receded and investors returned to the yellow metal, helping push the price higher.

Investors watching gold's price of late may view it as being caught between two factors.

On the one hand, there would be the bearishness of a sovereign default, which could trigger a liquidation run from holders needing to cover margin calls elsewhere.

In contrast, there would also be support provided by the uncertainty over potential economic bankruptcies.

The weakening US dollar helped keep the precious metal higher on Friday and all in all gold added $32.5 to its price, finishing at $1790.7.

With the weakening US dollar and strengthening stock market indices, the appetites of energy investors were wetted on Friday and hence the price was pushed to new recent highs.

Traders will still have lingering concerns over faltering Europe though and, with signs of a slowdown in China, the world's second highest oil consumer, the road ahead may not be smooth for black gold's price. This morning Brent is at $113.15.


By Simon Denham, 25 November 2011


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