Commodity Technical Analysis Outlook

SILVER

Silver moved lower overnight to open at 20.63/20.68, which was also the low of the day. Thereafter, it followed gold to a high of 20.79/20.84 prior to concluding the session at 20.73/20.78. 

Silver closed lower for the 3rd week in a row, at 20.78. The close breached a support level of 20.85, which was the 61.8% retracement of the July-August uptrend. Intraweek, silver also made a new low around 20.44. The move opens up a retracement to the last significant low of 19.16 from August. ADX has declined sharply from a high in the 72’s to the current 26 level, indicating that bear momentum has faded substantially in this consolidation since June 2013. Like gold, silver may be forming a bottom; however, near term risk is to the downside.

Silver settled down as pressure seen since last Thursday after strong U.S. GDP and jobs growth data

Yellen told that while the economy is on the mend, inflation and unemployment rates have room to move closer to Fed comfort zones.

Holdings at ishares silver trust dropped by 50.93 tonnes to 10392.89 tonnes from 10443.82 tonnes.

GOLD

Gold edged lower overnight to open at 1282.75/1283.75. After dropping slightly to a low of 1282.25/1283.25, it rose to a high of 1289.75/1290.75 while the dollar weakened following a drop in U.S. industrial output and weaker than expected NY Fed manufacturing data. Thereafter, the metal traded within range to close marginally lower at 1287.75/1288.75.

Gold closed unchanged this week at 1288, forming a doji in the weekly candlestick chart. Support is at the most recent significant low of 1251, while resistance is at the most recent significant high of 1361. The RSI on the weekly chart is at 40, still within bear market territory, and the most recent signal from MACD is a sell. The bearish trend in place since the major high at 1921 remains strong, with an ADX of 40, which indicates a strong trend. However, gold’s inability to make a new low below 1251 is encouraging from a longer term perspective, and it is possible that the metal is forming a bottom, particularly given that it nearly achieved our technical objective of 1155 (when it traded to a low of 1180).

Gold settled flat underpinned by expectations that the nominee to lead the Fed, Janet Yellen, would continue easy monetary policy in that role

Yellen told Senate Committee the Fed’s economic stimulus would continue, prompting gold speculators to buy back their bearish bets.

China has purchased 798 tonnes of the precious metal so far this year, compared to India’s 715 tonnes – WGC

COPPER

On the Comex division of the New York Mercantile Exchange, copper futures for December delivery traded at USD3.174 a pound during European morning trade.

Comex copper prices declined 2.55% on the week.
Copper futures tumbled to the lowest level since August after a top-level Communist Party meeting disappointed investors who were expecting announcements of major economic reforms.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.

Copper ended with losses due to the outflow of money for risk aversion.

China’s production of refined copper may have been inflated by more than 15 percent this year.

Copper daily stocks at Shanghai exchange came down by 1801 tonnes

CRUDE

On the New York Mercantile Exchange, light sweet crude futures for delivery in December fell to USD94.38 a barrel, down 0.12%, trading in a range of USD94.36 - USD94.49. On Friday, the contract closed at USD93.84 a barrel.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, traded at 80.95 on Monday, up 0.10%.
Traders remained concerned about rising U.S. inventories.

The U.S. Energy Information Administration reported Thursday that crude oil inventories last week rose by 2.6 million barrels, far more than the 994,000 barrels predicted by analysts.
Total U.S. crude oil inventories stood at 388.1 million barrels as of last week, the highest since June.

New York crude oil futures eased in early Asian trade on Monday with the dollar index up slightly with the contract seen consolidating as large stockpiles in the United States weigh on the market.

Crude oil dropped on the reports that a senior U.S. official said a deal with Iran on its nuclear program was “quite possible”.

Sanctions against Iran because of its nuclear program have kept some 1 million barrels of oil off the global market.

The IEA said that while oil markets look well supplied in the short term, prices could rise in next few months due to a seasonal increase in demand. 
Technical Levels

	SUPPORT 1	SUPPORT 2	RESISTANCE 1	RESISTANCE 2
GOLD	1281	1274	1292	1297
SILVER	20.57	20.43	20.96	21.11
COPPER	3.1485	3.1260	3.1890	3.2070
CRUDE	93.43	93.02	94.40	94.96

Commodity Contract S3 S2 S1 R1 R2 R3
Global Economic Data

TIME	DATA	PRV	EXP	IMPACT
7.30 P.M	TIC Long-Term Purchases	-8.9B	21.3B	MEDIUM
8.30 P.M	NAHB Housing Market Index	55	56	MEDIUM
10.45 P.M	FOMC Member Dudley Speaks			MEDIUM

TIC Long-Term Purchases

Source	Department of the Treasury(latest release)
Measures	Difference in value between foreign long-term securities purchased by US citizens and US long-term securities purchased by foreigners during the reported period;
Usual Effect	Actual > Forecast = Good for currency;
Frequency	Released monthly, about 45 days after the month ends;
Next Release	Dec 16, 2013
FF Notes	This data represents the balance of domestic and foreign investment - for example, if foreigners purchased $100 billion in US stocks and bonds, and the US purchased $30 billion in foreign stocks and bonds, the net reading would be 70.0B. The market impact tends to be significant but varies from month to month;
Why Traders Care	Demand for domestic securities and currency demand are directly linked because foreigners must buy the domestic currency to purchase the nation's securities;
Also Called	Net Long-term Securities Transactions;
Acro Expand	Treasury International Capital (TIC);

NAHB Housing Market Index

Source	NAHB(latest release)
Measures	Level of a diffusion index based on surveyed home builders;
Usual Effect	Actual > Forecast = Good for currency;
Frequency	Released monthly, around the middle of the current month;
Next Release	Dec 17, 2013
FF Notes	Above 50 indicates a favorable outlook on home sales, below indicates a negative outlook;
Derived Via	Survey of about 900 home builders which asks respondents to rate the relative level of current and future single-family home sales;
Acro Expand	National Association of Home Builders (NAHB);

FOMC Member Dudley Speaks

Description	Due to speak at Queens's College, in Flushing. Audience questions expected;
Source	Federal Reserve Bank of New York(latest release)
Speaker	Federal Reserve Bank of New York President William Dudley;
Usual Effect	More hawkish than expected = Good for currency;
Next Release	Nov 19, 2013
FF Notes	FOMC voting member Jan 2009 - Jan 2020;
Why Traders Care	Federal Reserve FOMC members vote on where to set the nation's key interest rates and their public engagements are often used to drop subtle clues regarding future monetary policy;
Acro Expand	Federal Open Market Committee (FOMC);