The CRB Commodities Index did not follow gold lower and is testing resistance at 335. Respect of resistance, signaled by reversal below 325, would confirm the primary down-trend — offering a target of 295*. Penetration of the declining trendline is unlikely, but would warn that the down-trend is weakening.
* Target calculation: 315 – ( 335 – 315 ) = 295
Spot silver followed gold, falling through support at $42/ounce. Respect of support at $37/$38 would indicate that the up-trend is intact; failure is unlikely but would test primary support at $33/ounce.
* Target calculation: 42 + ( 42 – 38 ) = 46
Brent crude is stubbornly holding above support at $104/$105 per barrel despite the promise of an early resolution to the conflict in Libya. Even WTI Light crude [lime] recovered slightly after improved manufacturing orders in the US. But the primary trend is down and failure of support at $104 would offer a target of $90 per barrel.
* Target calculation: 105 – ( 120 – 105 ) = 90
Rising stocks and a sharp fall on spot gold reflect uncertainty as to whether Ben Bernanke will announce further quantitative easing by the Fed, at Jackson Hole, Wyo. on Friday. Further purchases of Treasurys by the Fed would lift inflation and send investors scrambling for inflation-hedges like gold and blue-chip stocks. Stocks are rising, but gold is falling. Could it be that promise of an end to the conflict in Libya makes the world a safer place — or that a resulting fall in oil prices would reduce inflationary pressures? Brent crude and the CRB Commodities Index are both rising, suggesting that the precious metals blow-off is driven by profit-taking — after the sharp surge over the last few weeks and ahead of an uncertain announcement on Friday.
Spot gold is testing its secondary [green] rising trendline at $1700/$1720. Support is likely to hold — especially if there is any hint of QE3 on Friday — but failure would warn of a fall to the long-term trendline around $1500/ounce.
* Target calculation: 1900 + ( 1900 – 1700 ) = 2100
The monthly gold chart shows spot gold testing the upper trend channel of the long-term bull-trend. Correction to the lower channel would result in a substantial fall. A lot depends on what happens Friday.
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
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.
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
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
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.
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.
