Spot gold broke through resistance at $1800, signaling an advance to test $2000/ounce in the medium-term. Retracement that respects the new support level would strengthen the signal.
* Target calculation: 1800 + ( 1800 – 1600 ) = 2000
Crude divergence widens
The divergence between Brent crude and WTI Light crude has widened to more than $20/barrel. WTI is clearly in a primary down-trend, but there is stubborn support for Brent at $104/105 per barrel. Resolution of the conflict in Libya and Nigerian supply fears would see Brent prices soften to within a few dollars of WTI.
* Target calculation: 105 – ( 120 – 105 ) = 90
The strength in the Brent reflects the ongoing loss of high quality Libyan crude and fears of its recent replacement Nigerian bonny light…… Royal Dutch Shell declared force majeure on its Nigerian Bonny Light crude oil loadings for June and July. Shell blamed production cutbacks caused by leaks and fires on its Trans-Niger Pipeline.
via Brent crude oil reaches $21 premium over WTI – Commodities – Futures Magazine.
Aussie dollar recovery is tentative
The Aussie Dollar recovered above the former primary support level at $1.04, testing resistance at $1.06. Breakout would indicate an advance to $1.10. But there are several question-marks over the latest advance. First, the rally has accompanied a similar recovery on the ASX 200 (to test resistance at 4500). If resistance holds, as expected, the AUD is likely to retreat.
* Target calculation: 1.04 – ( 1.10 – 1.04 ) = 0.98
Second, the CRB Commodities Index confirmed a primary down-trend with a sharp fall below 335. The primary trend is unlikely to reverse at this stage and another down-swing would drag the Aussie Dollar lower.
* Target calculation: 330 – ( 350 – 330 ) = 310
Silver edges higher
Spot silver is headed for another test of $42/ounce after recovering above $40. Breakout above $42 would offer a medium-term target of $46* (long-term $50).
* Target calculation: 42 + ( 42 – 38 ) = 46
Gold back at $1800/ounce
After a brief but volatile dip, gold is again testing resistance at $1800/ounce. Rising Momentum threatens an exponential up-trend, with rapid gains and short retracements. Breakout would signal an advance to $2000.
* Target calculation: 1800 + ( 1800 – 1600 ) = 2000
Always bear in mind that exponential trends make rapid gains but inevitably lead to a blow-off; and stop losses employed in a normal trend are likely to react too late.
Econbrowser: Economic consequences of recent oil price changes
When oil prices are making new highs, we expect slower growth. It is interesting that the biggest effects on GDP come 3 or 4 quarters after oil prices have gone up…….. We often see some economic responses right away, such as a drop in consumer sentiment, fall in sales of less energy-efficient vehicles, or build up of inventories. But it usually takes some time for the effects of these to be multiplied as they ripple through the rest of the economy.
via Econbrowser: Economic consequences of recent oil price changes.
Silver tests support
Since its breakout on July 15th, silver established medium-term resistance at $42 before retracing to test the new support level at $38/ounce. With gold in an exponential up-trend, support is likely to hold and recovery above $40 would re-test $42. In the longer term, breakout above $42 would signal an advance to $45/ounce*.
* Target calculation: 39 + ( 39 – 33 ) = 45
Gold Falls Most in 7 Weeks on Stocks, Margins – Bloomberg
CME Group, owner of the world’s largest futures market, raised margins on gold by 22 percent. The minimum amount of cash that speculators must keep on deposit for an initial account increased to $7,425 on a 100- ounce contract from $6,075.
via Gold Falls Most in 7 Weeks on Stocks, Margins – Bloomberg.
…..time for caution on gold/gold miners until the market adjusts to the higher margins.
Gold tests $1800/ounce
Spot gold is testing resistance at $1800. A short retracement would indicate that a test of $2000* is imminent.
* Target calculation: 1800 + ( 1800 – 1600 ) = 2000
The Gold-Oil Ratio is headed for the overbought level at 20:1.
Brent Crude still undecided
Brent crude is still hesitant about joining Light (WTI) crude in a primary down-trend. After breaking through support at $105/barrel, the stock market bounce fueled a rally to test the new resistance level. The hourly chart is currently whipsawing around $105 without clear direction. Follow-through above $107 would warn of a bear trap, but target for the breakout is $90*.
* Target calculation: 105 – ( 120 – 105 ) = 90