Commodity Report (Gold, Silver, Copper & Crude): 7th Oct

Technical Levels

	SUPPORT 1	SUPPORT 2	RESISTANCE 1	RESISTANCE 2
GOLD	1303	1297	1324	1330
SILVER	21.52	21.29	21.95	22.15
COPPER	3.2670	3.2330	3.3260	3.3510
CRUDE	103.09	102.35	104.38	104.93

Commodity Contract S2 S1 R1 R2

GOLD

Precious metals were lower today, as equities rebounded from yesterday’s drop. Gold opened at 1314.00/1315.00 and traded to a high of 1325.00/1326.00, before easing to a session low of 1305.00/1306.00 around midmorning. The metal closed lower on the day, at 1310.00/1311.00. Gold closed lower this week at 1310. The overall technical picture on the weekly chart is bearish. The question is whether the major low on June 28th, at 1180, was a bottom before resumption in the long term uptrend, or whether the subsequent rally back to 1433 was a correction of a downtrend that is still in force. On the bullish side, the last signal in MACD was a buy signal generated on August 2nd. We have also had a substantial bounce in RSI, from the low at 20.83 shortly after the June 28th price low, to a high of 48.02. There is an RSI support level at 36, and if the latest downtrend (from the past 6 weeks) is simply a correction, then we would like to see the RSI support level hold, and then rally through 67, the previous resistance level. The downtrend of the past 6 weeks has held an important support level, 1277, which is the 61.8% retracement of the previous uptrend from the 1180 low to 1433 high. We are currently neutral, watching to see whether the previous 1273 low and support at 1277 hold. Gold fell as U.S. dollar recovered and investors braced for the political stalemate in Washington to drag on for another week. Congress must increase the country’s borrowing limit on Oct. 17 or risk default, a situation many fear would be far worse than the shutdown. John Boehner said the House would not vote on a spending bill without conditions to end the government shutdown.
SILVER
Silver opened today’s session at 21.70/21.75. Price advanced to an intraday high of 21.87/21.92 early on, before dropping back down to bottom at 21.49/21.54. The metal closed the week slightly lower at 21.70/21.75. Silver finished the week close to unchanged at 21.70, and has been in a downtrend the past 6 weeks. Similar to the technical picture for gold, this recent downtrend has held 20.85 support, the 61.8% retracement of the previous uptrend from June low at 18.23 to August high at 25.10. This is encouraging. The last signal in MACD was a buy signal generated August 2, and RSI has made an impressive bounce from a low of 19.20 to a high of 52.57, before trading down to the current 42 level. We would like to see RSI hold support around 40, and for price to hold 20.85. The gold-silver ratio is trading lower this week at 60.30. We like the ratio lower, retracing back to 57.09. The ratio was in a downtrend from its high at 67.47 in July to low at 57.09 in August. It corrected back up to 62.37, which is very close to a perfect 50% retracement (which comes in at 62.28). The next target is 58.86, another Fibonacci retracement level, followed by the 57.09 low. Silver seen under pressure as investors avoided as government shutdown dragged on with no end in sight and left markets without a key indicator due for release. Demand for the safe haven precious metal remained supported as investors continued to weigh the implications of a protracted U.S. government shutdown. Disappointing U.S. service sector data added to concerns that the shutdown in Washington could have wider consequences on the U.S. economy.
COPPER
On the Comex division of the New York Mercantile Exchange, copper futures for December delivery traded at USD3.301 a pound during European morning trade. Copper for December delivery advanced 1% on Friday to close the week at USD3.301a pound. On Thursday, copper futures tumbled 1.45% to settle at USD3.268 a pound.
Prices of the red metal declined 0.85% on the week, amid concerns a U.S. shutdown will create a drag on fourth quarter economic growth. World production of refined copper will exceed demand by around 390,000t in 2013, said the Lisbon-based International Copper Study Group (ICSG) in its Copper Market Forecast 2013-14. Following three years of relative stagnation, mine production this year is expected to increase by 6.5% compared to 2012, to 17.8Mt, while world refined copper production should end the year up 3.9% at 20.9Mt. Copper settled flat on the belief that the return of Chinese traders would lift demand for the metal. Copper consumption may rise to 8.586 mln tonnes in 2014. China’s exports of copper products could also get support from recoveries in the United States and Europe.
CRUDE
On the New York Mercantile Exchange, light, sweet crude futures for November delivery fell 0.35% to USD103.48 per barrel in Asian trading Monday. The November contract settled up 0.51% at USD103.84 per barrel last Friday. Last week, New York-traded crude broke a four-week skid, rising 0.95%. Oil futures were likely to find support at USD101.07 a barrel, the low from October 1 and resistance at USD105.09 a barrel, the high from September 23. Oil prices were boosted as Tropical Storm Karen continued to bear down on the energy-rich U.S. Gulf Coast prompting oil-rig evacuations ahead of time. Oil major BP shut in all its oil and natural gas output in the Gulf on Friday, while Exxon Mobil reduced output by 1,000 barrels of oil equivalent a day and pulled nonessential personnel from offshore operations in the region. Crude dropped as concerns over a tropical storm constraining supply in the Gulf of Mexico were offset by a prolonged U.S. government shutdown. Energy companies in the Gulf of Mexico started shutting in production and evacuating some rig workers. The National Hurricane Center said the storm was expected to be at or near hurricane strength and that it could reach Gulf Coast between Louisiana and the Florida