Gold has been the big gainer (once more) over the weak dollar and any shorts are being mercilessly squeezed this morning as we rally $10 overnight to a spread of 815.1-815.6. Whether this is sustainable is difficult to say but with demand from investors outstripping supply it is not a wise man who would bet against it. The Financial Spreads clients were heavy buyers a couple of days ago on the break back above $797 and are now sitting very comfortably.
Oil is also climbing but this is probably on the weak dollar rather than any other factor. Brent Crude is now around the $95 per barrel level and Nymex is pushing at $97 as punters are once again gunning for $100. On the other hand there is probably a huge weight of producer selling at this level as long term it would seem an unsustainable price.
Commodities Spread Trading, 22 Nov 07
Gold has bounced up again from the $797 / $793 support / resistance levels after seeming to take a look here through much of yesterday. Aside from the equity markets the traders in other financials, commodities and FX, seemed less enthused with getting into (or out of) positions and this led to quite a boring afternoon and evening session. Today we are back above $800 again with the Gold spread at $802.6-$803.1 the longs will be hoping that the recent price action will have built a support underneath the market.
In Oil, after the early attempts to get over the $99 dollar level, dealers eventually seemed to run out of puff and we traded down to the $97 level where we remain this morning (January Nymex). Brent Crude is open today and is expected to show only sporadic interest given a complete lack of news and no impetus from it’s closed US cousin. The Crude spread is now at $95.22-95.27 up 30 cents or so.
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Commodities Spread Trading, 21 Nov 07
We might be staring at a $100 a barrel but in euro terms, Crude Oil, is actually around 40% cheaper on a three year basis (still expensive but not quite so eye-watering).
Gold broke above the $797 resistance level in late session trade last night as the dollar weakened having failed twice in the normal session trading. There appears to be little follow through just yet this morning other than a bit of a short squeeze in very early action and we are now at $802.1-$802.6, still five bucks above yesterday's close but also five bucks below the early morning high. Clients are still slightly long, the break out last night seems to have kept buyers keen to buy more today. Traders will watch to see whether the break back into the 800's is just a short term move but the momentum seems to be back with the gold bugs especially as the USD / JPY cross weakens.
Oil just had one direction yesterday, Up. The price for Jan Brent rallied some 330 cents in the trading session and eyeing the charts we can see that there was very little evidence of any selling pressure at all with only small pull backs during the day and these only after sharp shifts higher. This shows evidence of a sort of rolling rout of short sellers as bulls ground the price unerringly higher through stops and we are now at all time highs of $95.65 - 95.70 for Brent and $98.36 - $98.42 for Nymex. Just a short push from $100. We can expect the next dollar fifty to be quite a battle as producers, unable to believe their luck, lock in guaranteed super-profits but with winter round the corner and OPEC not increasing production (or only marginally doing so). I’d expect OPEC to keep some production back in anticipation of a fierce shift higher if we go above the hundred buck mark.
Commodities Spread Trading, 20 Nov 07
Almost unbelievably, Gold had a quiet day yesterday trading in a 'mere' $16 range. We bounced off the $775 level and closed just below the $780 support which should have been quite a negative indicator. But the weakness in the dollar overnight has given the yellow metal a bit of a boost and we are now up 6 bucks at $786.0-786.5 and frankly looking quite solid.
Commodities Spread Trading, 19 Nov 07
Gold has stabilised in the $780's and dealers must now decide whether this was just a long awaited correction in the rally to $1000 or if there is more to come. Punters have (for once) not been buying into the latest weakness and while they do remain slightly long the net exposure on our books is the lowest it has been for many months. It is difficult to see a trigger for movement from here. However the support at $783 is seen as a potential buy/sell opportunity with $797 on the upside is resistance. The current spread is $787.5-$788.0.
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Commodities Spread Trading, 16 Nov 07
The Crude Oil spread betting market has had a relatively quiet week by all standards and with an overall decline since Monday, clients have seen this as a buying opportunity in the hope that the elusive £100 a barrel mark will be hit shortly.
Commodities Spread Trading, 15 Nov 07
Gold Spread Betting has rallied strongly from the sub $800 prices and is now sitting comfortably at $812.5-813.0. We are in something of a no-mans land here. In the last week or so the market hasn’t stopped here. It’s just been a point where the markets have been moving somewhere else (up or down). There is some resistance at $814 per barrel and interest from Financial Spreads clients around the $805 level. However, for once, the market appears rather subdued.
Oil repaid my rather worried comments of yesterday by rallying 250 pips! After Tuesdays dovish comments from OPEC out came the velvet coated Iron Fist yesterday with comments indicating that there will be no increase in production and a combative statement pushing some of the oil problems onto the heads of the US (not all that unreasonable). Today the Crude Oil market has dipped half a buck to $90.66-90.71 (December Brent). Traders will be eyeing $90.30 support for signs of strength but, like Gold, the markets are reasonably quiet.
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Commodities Spread Trading, 14 Nov 07
Gold has bounced back for the second time in two days from the sub 800 level and bulls will be taking some comfort from the resilience of the support at 794 and 797. Trading ranges on Tuesday and this morning have shown some signs of perhaps tightening up a bit to allow for a little consolidation before the next move. As regular readers know, I ‘might’ personally think that Gold is one of the more useless products in the world. However at the moment the general momentum is still very much to the upside and would remain so even if we fell another 120 bucks! Current support at the previously mentioned 794 and 797 levels seems to be holding but below here we have major trendline support at around 785. To the upside there is little to mention other than minor resistance at 808 and then up at 823 and 829 before the highs come into play at 844. The hourly charts are showing the possibility of a head and shoulders formation which may have some bulls a bit worried but other than this the buyers are still in the driving seat.
Brent December Crude Oil has now dropped 6 dollars from the highs of last week. The Nymex December market has dropped $7. The effect of OPEC dovishness has started to have an effect. Whilst some continue to harp on about the economic growth of the emerging nations as a catalyst for higher prices this is in reality a story for the future not for the current environment. The US also appears to be being more cautious in its pronouncements over Iran which may reduce the political risk. The current price is 91.55-91.60 as we bounce a bit from yesterdays $3 fall and the probability is that the recent drop is just a correction but the elusive $100 barrel is still…elusive…Traders will be worrying that there is a long way to fall if the market turns. In can imagine that there is a good deal of $75 a barrel 'put' buying going on at the moment.
Commodities Spread Trading, 13 Nov 07
Gold had it worst day since 13 Jun 2006 when it dropped over $40. Oddly enough that day pretty much saw the best buying opportunity for the past few years. Capital Spreads clients are trying to buy into the fall but were hurt on an almost continuous basis yesterday. As my comment suggested yesterday the early buyers were trampled when the big traders came in and sought out to batter the easy longs. We may well see some volatile activity as spooked traders make quick buy/sell decisions. At the moment the gold spread betting market is sitting at $805.0-805.5 up a buck or so from our closing level yesterday. However at one point yesterday it did drop 10 dollars lower in very late US action. There appears to be good support between $793 and $797 which will bolster the bulls. On the other hand the speed of the reversal will probably make buyers nervous if we go much higher.
Commodities Spread Trading, 12 Nov 07
Oddly enough with the dollar finally weakening against the Yen you would have imagined that Gold would be going for the moon as far eastern investors watch the price (in their local currency) drift lower. But the opposite is the case with the gold spread betting market opening $14 lower this morning at 818.0-818.5. Punters will be hoping that the spike of the last two and a half months is not a repeat of early 2006 move which swiftly resulted in a $170 fall down to $550. A similar drop would have us down to 670 or there abouts. That would not actually break the long term positive trend line (such has been the speed of the rally) so those who go on about the long term direction of the gold market may be warned that the potential for seemingly massive falls whilst still remaining long term positive is very much alive. In reality the market does need a bit of a pull back if only to get rid of some of the short term speculative longs who are trying to get on the move. After the initial drop we are seeing strong buying from punters who see this as the fall out that they need to get long. This is likely to be the same across Europe with smaller traders getting in on any drop so our clients should be wary of the possibility of a renewed bull hunt later on this morning as the bigger traders come in and try to force us lower once more.
Oil has also dropped over the week end (although people may see this as good news). The Saudi's announced the possibility of increased production. The cold weather in Northern Europe this weekend will have reminded many that winter may not be as benign as last year. The Brent (December) spread betting market is at $92.25-$92.30. A dollar lower than Friday but still, lets be honest, still bl**dy high. Filling my wife's 4x4 gas guzzler will be a painful experience. Have we peaked or is this just a pause in the climb to the stars? Inventories are not exactly robust but on the other hand we are not looking for the last drop either so this time next year we may be seeing much lower prices if world growth does slow a touch. In the meantime, the El Dorado of $100 is still there so we can expect renewed attempts in the coming trading sessions. If we take too long at these levels though the probability of a high being formed gets more likely so punters are (as always) reminded to keep their stop losses tight in the current trading environment.
'Commodities Broker' by DB, updated 23-Nov-07
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