Technical Levels : GOLD , SILVER , CRUDE OIL 1. GOLD : SUPP : 1288.30 - 1279.60 - 1266.50 RESI : 1310.10 - 1323.20 - 1331.90 BELOW 1306 may test 1298-1293-1281 ABOVE 1325 may test 1341 POSITIVE ONLY ABOVE 1347 GOLD : Gold retained two days of losses to trade near a four-week low on Wednesday, below $1,300 an ounce, on a stronger dollar and fears that the Federal Reserve could hike U.S. interest rates sooner than expected. Spot gold was little changed at $1,295.76 an ounce , after losing 3.3 percent in the last two sessions - the metals biggest two-day loss since October. Fed Chair Janet Yellen said on Tuesday U.S. labor markets are far from healthy and signaled the Fed will keep monetary policy loose until hiring and wage data show the effects of the financial crisis are completely gone. However, Yellen said the one thing that might prompt the central bank to raise rates earlier or faster is if hiring and wages take off in an unexpected way. Higher rates would encourage investors to withdraw money from non-interest-bearing assets such as gold. Meanwhile, a strengthening U.S. economy and job market means the Fed should begin raising interest rates relatively soon, Kansas City Federal Reserve Bank President Esther George said on Tuesday. George said by many measures, including a recent rise in rent and food prices, and strong hiring reports, the Fed should have already lifted interest rates from the zero level. Investors were eyeing demand in the physical markets to see if the price drop below $1,300 has prompted buying. Physical demand has been immune to the recent price declines, with major buyers China and India holding off. In an accompanying report, however, the Fed said its balance sheet would top out at $4.5 trillion when its bond-buying program ends in October - a timeline consistent with what Fed policymakers had said previously. Yellen defending the current policy was expected but ultimately rates will be hiked and investors wont have reason to hold gold, said VTB Capital analyst Andrey Kryuchenkov. Evan Lucas of IG Markets says that a strong earnings season is shaping up, and that will continue to weigh on gold prices going forward. “Yes, the bears will point to estimates being lowball and the market is likely to discount the results somewhat,” he said. “However, the signs are that the U.S. is standing on its own two feet after so much fiscal support.” The Fed comments...definitely [caused] a rally in the dollar and a selloff in gold, Fain Shaffer, the president of Infinity Trading Corp., said. NO REASON TO HOLD GOLD Gold fell after Fed chair Janet Yellen hinted interest rates could rise faster if job market recovery was better than expected, although she noted the labor market was still ailing and Fed help for the economy was still needed. Yellen defending the current policy was expected but ultimately rates will be hiked and investors wont have reason to hold gold, said VTB Capital analyst Andrey Kryuchenkov. 2. SILVER : SUPP : 20.663 - 20.436 - 20.203 RESI : 21.123 - 21.356 - 21.583 3. CRUDE OIL : SUPP : 98.96 - 97.96 - 96.91 RESI : 101.01 - 102.06 - 103.06 CRUDE OIL : World oil prices have rapidly erased a geopolitical risk premium that had been pushing prices up since April, and selling has accelerated in recent days as traders shift their focus from violence in Iraq and Libya to weak global fundamentals. Despite ongoing fighting between militias in Tripoli, Libyas oil output has risen to 588,000 barrels per day (bpd), an increase of around 25 percent since the weekend, the acting oil minister told Reuters. There is a sense that the supplies are going to outweigh the demand in the short term, said Phil Flynn, an analyst at Price Futures Group in Chicago. Other risk markets also fell on Tuesday after comments from U.S. Federal Reserve Chair Janet Yellen, who defended the central banks loose monetary policy in testimony to a Senate committee. U.S. stocks slid after she raised concerns about substantially stretched valuations in some sectors. “Easing fears of an Iraqi supply disruption and tepid fuel demand levels continue to erase the geopolitical risk premium (Iraq and the Ukraine) that boosted both [WTI and Brent] markets to nine-month highs late last month,” said Eugene McGillan, strategist at Tradition Energy in Stamford, Conn., in a note. Analysts at JBC Energy noted that all three major oil-forecasting agencies — the Organization of the Petroleum Exporting Countries, the International Energy Agency and the U.S. Energy Information Administration — have cut their forecasts for growth in oil demand this year. Libya is preparing to resume oil exports as separatists have said they intend to comply with an agreement to reopen key oil ports. Expectations for a rebound in long-depressed Libyan oil production helped push oil futures lower last week. A “closer reading” suggests, however, that plenty of supply risks remain, said Tim Evans, an energy futures analysts at Citi, in a note. “ While we don’t advise stepping in front of the decline in price, we do think that what has shifted most dramatically over the past 2-3 weeks is market sentiment rather than the actual situation on the ground, and that sentiment can shift just as dramatically to a more bullish mode without much of a transition,” Evans said. The market may have a hard time handling the surge in Libyan oil production, John Kilduff, a partner at Again Capital LLC, said. In a very short time the market has moved from concerns about insufficient supply to what may turn into an oversupply situation. It looks like speculators just got tired of being long, added Bill OGrady, chief market strategist at Confluence Investment Management. The selloff isnt over. The market is going to reach some level where we get a snap back, although not to the high levels we saw a few weeks ago.
Posted on: Wed, 16 Jul 2014 08:37:25 +0000
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