Gold, Silver, Copper, Crude Commodity Outlook: 3rd Oct 2013

Technical Levels

	SUPPORT 1	SUPPORT 2	RESISTANCE 1	RESISTANCE 2
GOLD	1293	1266	1334	1348
SILVER	21.24	20.59	22.29	22.69
COPPER	3.2695	3.2230	3.3410	3.3660
CRUDE	102.27	100.45	105.07	106.05

Commodity Contract S3 S2 S1 R1 R2 R3

GOLD

Gold recovered today after yesterday’s rout as equities dipped amid concerns over continued US government shutdown. The metal opened at 1297.50/1298.50, dipped slightly to a low of 1297.00/1298.00 early on, before advancing to a high of 1323.50/1324.50 by mid-morning. Price traded around this level for the remainder of the session, closing at 1320.00/1321.00. Gold traded higher today, closing at 1320 after yesterday’s weak close. Key support is at the 1273 low from August 7. Resistance is at the recent high of 1354.

Gold dropped after U.S. Congress failed to reach an agreement on a budget for the next fiscal year, leading to the first government shutdown in 17 years. The U.S. government began a partial shutdown after lawmakers failed to reach an agreement on a new budget before Monday’s midnight deadline. SPDR Gold Trust said its holdings fell 0.46 percent, or 4.2 tonnes, to 901.79 tonnes.

SILVER

After trading sideways overnight, silver opened today at the session low of 21.25/21.30. Price traded higher to peak at 22.00/22.05 on weak private payroll growth and the continued standoff in the US government. The metal then retreated from its high, closing the day at 21.88/21.93. Silver also traded higher, closing at 21.88 and erasing yesterday’s losses. Interim support is at yesterday’s low at 20.62. There is resistance in the low-22 area which has been a congestion area since mid-September, and which was previously a big support level from April to June.

 Yesterday we warned of a potential bearish move in the gold-silver ratio, and this was confirmed today with a close lower at 60.45. The lower close is a sell signal, targeting 58.70, the last major low (from September 19). Resistance is at yesterday’s high at 62.37. Silver dropped as investors viewed metal as less profitable due to improving data and sentiments that a U.S. government shutdown will be short lived. Prices fell due to technical factors as investors saw little to support the precious metal going forward. Market talk continued to persist that Fed will keep its monthly bond-buying program in place to offset any damage the shutdown may inflict on recovery.

COPPER
On the Comex division of the New York Mercantile Exchange, copper futures for December delivery traded at USD3.278 a pound during European morning trade, up 0.1%. Copper prices traded in a range between USD3.249 a pound, the daily low and a session high of USD3.282 a pound. The December contract settled 1.5% lower at USD3.274 a pound on Tuesday.

Copper prices were likely to find support at USD3.249 a pound, Tuesday’s low and the weakest level since September 24 and resistance at USD3.337 a pound, Tuesday’s high. Copper futures swung between small gains and losses on Wednesday, amid concerns a partial shutdown of the U.S. government will create a drag on fourth quarter U.S. economic growth. Copper edged lower as investors digested disappointing manufacturing data out of China and after U.S. lawmakers missed a deadline to avert a government shutdown. China data showed that the nation’s official manufacturing PMI inched up to 51.1 in September from 51.0 in August. Some investors however were worried about the longer-term prospects for the metal, due to a looming supply surplus.

CRUDE 
On the New York Mercantile Exchange, light, sweet crude futures for November delivery fell 0.34% to USD103.75 per barrel in Asian trading Thursday. The November contract settle higher by 2.02% at USD104.10 per barrel on Wednesday. The crude oil inventories release showed an increase of 5.5 million barrels for the week ending September 27. This was higher than the consensus of a 2.3 million increase in the number of barrels, reflecting a downturn in consumption. The total number of crude oil inventories in the US was at 363.7 million barrels that week.

In US economic news, the government shutdown carried on for its second day in a row as President Obama refused to budge until a good budget deal is struck. Oil futures traded lower during Thursday’s Asian session on some profit-taking following a stellar performance during Wednesday’s U.S. session that saw crude soar on news of a potential drop in supply. Energy company TransCanada revealed that it would not be able to finish its work on a part of the Keystone pipeline this October. Crude dropped amid concerns a partial shutdown of the U.S. government will create a drag on fourth quarter U.S. economic growth. Oil has come under downward pressure in the past month as supply has improved, with Libya ramping up output and tensions easing over Syria. U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories rose by 5.5 million barrels.

 

Global Economic Data

TIME	DATA	PRV	EXP	IMPACT
6.00P.M	Unemployment Claims	305K	315K	STRONG
7.30P.M	ISM Non-Manufacturing PMI	58.6	57.2	STRONG
8.00P.M	Natural Gas Storage	87B	96B	LOW

Unemployment Claims

Source	Department of Labor (latest release)
Measures	The number of individuals who filed for unemployment insurance for the first time during the past week;
Usual Effect	Actual < Forecast = Good for currency;
Frequency	Released weekly, 5 days after the week ends;
Next Release	Oct 10, 2013
FF Notes	This is the nation's earliest economic data. The market impact fluctuates from week to week - there tends to be more focus on the release when traders need to diagnose recent developments, or when the reading is at extremes;
Why Traders Care	Although it's generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions;
Also Called	Jobless Claims, Initial Claims;
Source	Department of Labor (latest release)

ISM Non-Manufacturing PMI

Source	Institute for Supply Management (latest release)
Measures	Level of a diffusion index based on surveyed purchasing managers, excluding the manufacturing industry;
Usual Effect	Actual > Forecast = Good for currency;
Frequency	Released monthly, on the third business day after the month ends;
Next Release	Nov 5, 2013
FF Notes	Above 50.0 indicates industry expansion, below indicates contraction. Source changed series from unadjusted to seasonally adjusted as of January 2001. Source changed series calculation formula as of Feb 2008;
Why Traders Care	It's a leading indicator of economic health - businesses react quickly to market conditions, and their purchasing managers hold perhaps the most current and relevant insight into the company's view of the economy;
Derived Via	Survey of about 400 purchasing managers which asks respondents to rate the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories;
Also Called	Services PMI, Non-Manufacturing ISM Report On Business;
Acro Expand	The Institute for Supply Management (ISM), Purchasing Managers' Index (PMI);

Natural Gas Storage

Source	Energy Information Administration (latest release)
Measures	Change in the number of cubic feet of natural gas held in underground storage during the past week;
Usual Effect	No consistent effect - there are both inflationary and growth implications;
Frequency	Released weekly, 5 days after the week ends;
Next Release	Oct 10, 2013
FF Notes	While this is a US indicator, it most affects the loonie due to Canada's sizable energy sector;
Also Called	Nat Gas Stocks, Nat Gas Inventories, Working Gas;
Acro Expand	Energy Information Administration (EIA);