Commodities January Spread Betting
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A regular Commodities spread trading update by Simon Denham of Capital Spreads. For the latest Commodities spread trading update, click here.
Commodities Spread Trading, 18 Jan 08
I do love the articles propounding the underlying value of Gold as against currency (printed money). In reality Gold is a dead hand. Whilst the price has been going up sharply in the past couple of years, by any long term valuation a pension fund investing in the Yellow Metal would be doing pretty badly. You cannot eat it, burn it, it costs you money to hold and gives next to no return. Its only value is in its rarity, the perceived attractiveness as Jewellery (although many consider it rather gaudy) and its macho appeal when held in vaults. There are very few investments for which the price has to go up for you to make a return and when everyone is calling for a rally it is often the moment that the wise money is just getting out. Remember, with interest rates at 5.5% in the UK, Gold must end the year at $950 (if you start from 900 today) for you to have matched just bunging the money in the bank. It is a good ‘benchmark of last resort’ for Central Banks to hold in reserve but for the average investor looking for long term returns...mmmm?
Gold continues to slide slowly as the Dollar stabilises and the Gold Spread is now down at $876.5-$877.0 some $40 from the highs of earlier in the week. As mentioned yesterday the rally has been so strong that the trend and momentum indicators could tolerate some very sharp downward price shifts and still remain Bullish. Medium term support can get down to $815 before breaking and Long term support remains all the way down to the low 700’s. Clients continue to buy on any weakness and we are seeing a steady trickle of purchases this morning.
Crude Oil is likewise weaker (although up a tad this morning) as the lack of any actual bad news weighs on the long positions. We seem to have found some support at $88.30 in the Brent Crude Oil March contract but if this goes traders will be eying the crucial $86.30 level which held once in November and twice in December. To the upside the obvious target remains $100 but the March contract high is actually just around $98 and there is growing resistance to moves above $90.70.
Commodities Spread Trading, 17 Jan 08
Gold fell again yesterday and this morning the Gold Spread Betting Market is called 2 bucks lower at $883.0-$883.5. With so many buying opportunities now available the value of Gold as a hedge may be waning slightly but if the markets slip again do not be caught short.
Commodities Spread Trading, 16 Jan 08
Gold has shifted below $900 and as mentioned the more aggressive Capital Spreads Accounts sold out above $900 and have been proved right once again. The Gold spread is now at $884.5-$885.0 for spot Gold. It could actually fall all the way to $825 and still retain the medium term bullish trend and can get all the way to $720 before attacking the long term support. Remember in 2006 the price fell from $730 to $550. That said the trend is still to the upside so punters are still overall buyers on any weakness.
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Commodities Spread Trading, 15 Jan 08
Gold hit new highs yesterday up at $918 before profit taking and sheer tiredness caused a bit of a pull back to the $900 level in the afternoon and evening. Continued dollar weakness has brought a few buyers out again this morning but it does, for once, appear half hearted. The Capital Spreads Account Holders are still very long but some of the more aggressive buyers have pocketed their bets and are now sitting out on the sidelines.
Commodities Spread Trading, 14 Jan 08
With the dollar weaker this morning, Gold is (naturally) significantly higher in early action with the market trading well through $900 at 905.6-906.1. As mentioned many times in my morning comment it is very difficult to oppose the current moves. Every indicator you can think of is bullish and, no matter what my personal opinion of the value of an inert yellow lump of metal, it’s rarely wise to stand in the way of a rolling locomotive.
As mentioned last week, Crude Oil Spread Betting is struggling at the top end of the range as supply continues at the higher end and political friction seems somehow to be not as bad as feared. This morning Brent Crude is called a few cents higher at $91.30-$91.35 and we are now some $8 off the highs of the New Year. Will this be a year of falling gas prices? We must now watch for a series of supports at $89.30, $87.20 and $86.40. If we break these and close lower then the oil bears may finally have something to get their teeth into. The bulls however will be hoping for:
a) some US/Iran dispute, and/or
b) a renewed problem in Nigeria, and/or
c) a renewed problem in Pakistan, and/or
d) some sign that the world economy is not indicating a slowdown.
So the usual then.
Commodities Spread Trading, 11 Jan 08
As mentioned yesterday, Gold took the marginal weakness in the morning as another buying opportunity and ended the day up another ten bucks at $895, a new all time high. This morning we are slightly off with the Gold spread at $893.0-$893.5 but sellers are few and far between. $900 beckons and then the Eldorado of $1000, who are we to stand in the way of destiny.
Crude Oil weakened again as supply problems appear to be fading slightly. China’s slight fall in trade surplus may be taken as a slowdown indication which could make for a reassessment of price expectations. But if the fall in the Chinese surplus is due to increasing domestic consumption rates the opposite may be the case. The February Brent Crude Oil spread is at $92.78-$92.83 up 60 cents overnight.
Commodities Spread Trading, 10 Jan 08
On the commodity front Gold, Silver and Oil all had a bit of a down day yesterday as the Dollar recovered slightly. Gold is weaker again down 5 bucks at $873.7-$874.2 this morning but this is probably just a bit of profit taking after we hit $892 in early action yesterday. Much as I am dubious about the value of the yellow metal from an absolute point of view the trends cannot be ignored and until the upward momentum is broken it is a fool who swims against the tide.
Oil had a dramatic day yesterday as prices drifted lower only to run into weaker than expected US inventory number which caused a two dollar spike up to the resistance at $97.85 (February Nymex) only for this to hold steady and the sellers to take hold again and force the price down to close near the lows of the day again at $95.60-$95.66. This morning there is little change with the Brent Crude Oil spread off 20 cents at $94.22-$94.27 and we continue to be buffeted by non-financial events.
Commodities Spread Trading, 9 Jan 08
On the commodities what can we say? Gold took out all resistance levels to surge to a new all time high and is up another couple of bucks this morning with the gold spread at $884.7-$885.2. The Capital Spreads Accounts have truly had an amazing time in the yellow metal. They have consistently been maximum long for the last two years and are still buying into any weakness.
Oil has regained some of the losses of the last few days as tension again rises in the Middle East with Iran, obviously needing to sell off a bit more forward production, causing a bit of a military confrontation with the US Navy (or am I being a bit too cynical?). The Brent Crude Oil spread is now at $95.84-$95.89 up 30 cents over night. Today sees the US inventories numbers so punters will probably be quiet until this is released at 15.30
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Commodities Spread Trading, 8 Jan 08
Gold is reacting to the minor dollar weakness and is moving sharply higher again overnight with the spot gold spread up $8 at $865.3-$865.8 with Financial Spreads. The momentum is very much in the bulls favour at the moment and, whilst my personal opinion of the value of the yellow metal is not one half of the current level, buyers continue to push us higher and higher. The peak at $869.5 is within sight but if we fail again up here it would increase the chances of a short term bear move. With crude oil having hit the fabled $100 level you can almost hear the slathering of lips over the potential $1000 price target.
As mentioned above, crude is continuing to react to the failure to establish a foothold above the $100 mark and we have now fallen $4.50 in two trading sessions. As mentioned yesterday the (relative) calm in Pakistan, which caused the initial spike, and the overall levels supply do not justify a price at these highs. But on the other hand we are one piece of bad political news away from $110 so traders will have to tread warily. The current crude oil spread is 94.37-94.42 for the Brent February market. Major support for the whole move higher is at around $92.00 so another day like yesterday would certainly set the cat amongst the pigeons.
Commodities Spread Trading, 7 Jan 08
Gold is slightly lower today at $856.2-$856.7 but the love affair with the Yellow metal continues. Everyone always says Gold is an inflation hedge...I am still rather fogged as to why? It gives no real return, costs money to hold and apart from Ego and Vanity factors is not even used much. A product with little return appears to me to be a truly awful inflation hedge much better to buy stocks which can match rising prices with impunity (utilities spring to mind).
Crude Oil gave up on the $100 level in style, falling to $97.80-$97.86 for the Feb Nymex. The political fears of the Pakistan assassination do not appear to have materialised so we may have a great deal further to fall. In reality there is (at the moment) lots of the stuff sloshing about and from the inventories releases not much of a bottleneck here either.
Commodities Spread Trading, 4 Jan 08
Gold had yet another move higher yesterday with spot almost getting to $870. The highest gold has ever been is $873 in intraday trading. Investors seem to be piling in on any indication of US economic weakness so once again the figures today will be key. Clients remain long and reaping the rewards of this continued, sustained rally.
Crude Oil retreated from $100, but only mildly and you get the feeling that it won't take much to send the price hurtling to new highs if something bad happens or stockpiles continue to remain low. Despite all the hype about $100 the fact remains that we are not going to see cheap oil prices for a long time and the consumer's spending power is already being affected.
Commodities Spread Trading, 22 Dec 07
The Daily Comment has now closed for the Festive period. We’ll be back up and running on 4-Jan-08. In the meantime, have a very Merry Christmas and a Happy New Year.
Risk Warning: Spread betting and CFD trading carry a high level of risk to your capital and you may lose more than your initial investment. Spread betting and CFD trading may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
'Commodities January Spread Betting' by DB, updated 18-Jan-08
For related pages also see:
WTI Crude Oil Falls as US Driving Season Fails to Boost Demand, updated 22-May-13
With no clear evidence of rising oil demand even though we have entered the US driving season, the price of WTI crude oil fell for a second session yesterday, losing $0.96 to...read article: WTI Crude Oil Falls as US Driving Season Fails to Boost Demand.
US Dollar Strength Drags Gold Futures Lower Following $40 Gain, updated 21-May-13
In commodities spread betting, gold closed around $40 higher at $1,393.4 yesterday, but is dropping off this morning due to a stronger dollar. The precious metal has dropped by around 20% so far...read article: US Dollar Strength Drags Gold Futures Lower Following $40 Gain.
Commodities Trading: Gold and Silver Rally Despite Bearish Outlook, updated 20-May-13
A fairly quiet session in equities means that all the fun is to be had in the commodities sphere. Last week's unrelenting doom for gold and silver seemed to be about to repeat itself. However, both gold and silver have rallied off...read article: Commodities Trading: Gold and Silver Rally Despite Bearish Outlook.
Soft Commodities: Soybean Surges on Chinese Demand and Overplanting of Corn, updated 17-May-13
Soybean has had its biggest weekly rise since January as buying from its biggest importer, China, pushes the prices higher. This has been coupled with news that the US has overplanted corn, leaving...read article: Soft Commodities: Soybean Surges on Chinese Demand and Overplanting of Corn.
Copper Prices Slip as Global Inflation Looks to Fall Back, updated 16-May-13
With inflation falling back across the globe a lot of investors are winding back their gold exposure and putting their cash to work in higher yielding assets. The copper price also looks set to post its fourth...read article: Copper Prices Slip as Global Inflation Looks to Fall Back.
Soaring US Dollar Hurts Commodities: Gold and Silver Hit 3-Week Lows, updated 15-May-13
The soaring dollar has ensured continued pressure on the entire commodities complex, with gold and silver both seeing prices fall to three-week lows. Outflows from ETFs are being blamed, along with the decidedly...read article: Soaring US Dollar Hurts Commodities: Gold and Silver Hit 3-Week Lows.
Concerns Over Equity/Commodity Market Disconnect Grow as Copper Drops Another 2%, updated 14-May-13
Copper is suffering a delayed reaction to yesterday's weak China figures, dropping 2% and reigniting fears about the steady and growing disconnect between equity markets and commodity prices. Although not...read article: Concerns Over Equity/Commodity Market Disconnect Grow as Copper Drops Another 2%.
OPEC Demand Concerns Hurt WTI Crude Oil Despite Retail Sales Data, updated 13-May-13
Last week's concerns about shorter-term demand expressed by OPEC appear to have tempered upside for the time being. WTI prices have also struggled despite the better-than-expected retail...read article: OPEC Demand Concerns Hurt WTI Crude Oil Despite Retail Sales Data.
Commodities Spread Betting Library, updated 29-May-13
A range of commodities trading articles with analysis, commentary and the major market moving news. The commodities spread betting features focus on the gold and crude oil futures markets as well as...read article: Commodities Spread Betting Library.
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