Commentary: Gold rose for a third day, adding $6.32, or 0.46%, to settle at $1,387.85. Prices continue to claw back from a key technical support area near $1,360. Gold has essentially been range-bound for the last three months as the sizzling gains from 2010 are digested. Fundamentals remain supportive of the metal amid an extremely loose monetary environment and steady growth in investment demand. On the other hand, this fundamental backdrop will change at some point. The precursor to this would be a self-sustaining recovery in developed world economies. That would be the green light for rate hikes, though it is unclear whether it would materially impact the demand for gold (which is necessary for any meaningful pullback in prices).
Technical Outlook: Prices put in a bearish hammer candlestick below resistance at $1,388.38, the 50% Fibonacci retracement of the 1/3-1/7 downswing, hinting the corrective upswing noted this week may have run out of steam. A reversal lower from here sees minor support at $1,379.96 – the 38.2% Fib – but a confirmation of a concrete reversal requires a daily close below horizontal support at $1,361.39.
Commentary: Silver moved modestly higher, gaining $0.16, or 0.52%, to settle at $29.68 on Wednesday. ETF holdings were flat at 480.4 million troy ounces.
The gold/silver ratio was little changed at 46.8, just above the four-year low near 46 set last month. (The gold/silver ratio measures the relative value/performance of the two precious metals. A higher ratio indicates gold outperformance, while a lower ratio indicates silver outperformance)
Technical Outlook: Prices are drifting higher having after bearish momentum stalled above horizontal support at $28.32. The bulls initially target support-turned-resistance at the bottom of a bearish rising wedge formation set from early November that was taken out last week, now at $30.40.The $28.32 level remains as near-term support.
Commentary: Crude oil rose for a third day, with WTI putting in a $0.75, or 0.92%, gain to settle at $91.86, while Brent added $0.51, or 0.52%, to settle at $98.12. Bonny Light surpassed $100 briefly. The Trans-Alaska Pipeline that was shut down earlier this week was partially restarted to prevent crude oil inside from freezing. Crews are still performing repairs, thus the situation is not completely resolved yet.
Today’s move higher seemed to be merely a continuation of the strong momentum from earlier this week on the back of the Alaska supply disruption. The fact that US equity markets hit new 27-month highs also helped sentiment.
Meanwhile, the latest Department of Energy report on US petroleum inventories showed the first build since October. Even so, the increase was much less than normal, which caused the surplus to the five-year average to fall for the tenth time in eleven weeks.
Technical Outlook:Prices are retesting support-turned-resistance at rising trend line set from the swing bottom in November, now at $92.92, with a break higher exposing the top of a rising channel set from late August (now at $94.43). Alternatively, a reversal downward sees initial support at $87.33.
