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Paul Ebeling Gold, Silver and Crude Oil Report

Gold, Silver and Oil Report 13 March 2011

Red's Weekly Report on Gold, Silver and Crude Oil Charts by Omega Research

13 March 2011

Paul A. Ebeling, Jnr. Asian Gold Trust ETF (NYSE:AGOL) New, Gold Shares ETF (NYSE:GLD), Comex Gold Trust Fund (NYSE:IAU), Swiss Gold ETF (NYSE:SGOL), Gold ETF (LSE:BULL), Comex Gold ETF (TSX:IGT)

The Overall Fundamentals Players attention shifts from chaos in the MENA region, to natural disaster in Japan Player attention shifted from the Middle East and North Africa to Japan's huge earthquake on Global economic growth. This coming week, the aftershock of Japan's earthquake will be one of the Key issues, the BOJ will hold a policy board meeting on March 14, a day earlier than previously scheduled. The US Fed's FOMC will also meet later in the week for policy discussion. I believe Key interest rates will stay unchanged, and the asset-purchase plan will be kept at US$600+. Though the Bank of Japan (BOJ) has set up an emergency task force, and pledged to provide liquidity, the disaster will delay the recovery of the World's 3rd largest economy. Gold futures on the COMEX Division of the New York Merc rebounded Friday, narrowing the 1st weekly loss since January on safe-haven demand. The most active Gold contract for Apr delivery rose 9.3 oz, or 0.66%, to settle at 1,421.8 oz. Gold prices closed off 0.5% last week, after hitting a record 1,445.7 oz on March 7. Silver for May delivery gained 86.9c, or 2.5%, to 35.935 oz. and Apr Platinum rose 16.1c, or 0.9%, to 1,781.7 oz. Crude Oil prices initially extended the Strong rally of the past few weeks as tensions in the MENA region escalated. Prices reversed into week's end on profit-taking as focus shifted to macro-economic data and sovereign risks in the EuroZone. During the week, the front-month contract for WTI Crude Oil price was -3.12% to settle at 101.16 while Brent Crude contract lost -1.84% to 113.84. The widening of WTI-Brent spread resumed Wednesday as US Crude Oil inventory rose more than expected.

More on Gold, Silver and Crude Oil Gold rallied to a record high of 1445.7 last Monday but profit-taking then drove the metal lower Thursday by 40$'s The price rebounded strongly Friday as Japan's earthquake and sovereign concerns in the EuroZone on safe-haven demand. Silver, following Gold's coattail, also drifted lower after making a new 31 yr high last Monday. The metal's rebound Friday managed to recoup all losses made in the middle of the week. The PGMs, both Platinum and Palladium prices slipped as players feared that potential slowdown in growth would limit demand for them. From our POV here at LTN, both Shayne and I expect the Gold's price has further room to rise as factors including geopolitical tensions inflationary worries and sovereign crisis concerns remained. Last week, Moody's downgraded Greece's sovereign rating by 3 notches to B-1 as the country's default risk has 'materially increased'. While the government will likely 'achieve its objectives' and 'will not need to impose losses on credits', the agency believes there are 'material risks to that outcome'. The new rating suggests Greece has a 20% chance of default across a 5-yr time line. A few days later, it announced a downgrade on Spain's rating by 1 notch to Aa-2. The agency now expects Spanish banks will need as much as 50B Euro to meet new capital requirements, more than double the 20B Euro projected by the government. Moody's put the country in 'negative' outlook as risks to public finances are 'skewed to the downside'. EU members began a meeting Friday. One important issue on the agenda is to discuss measures to help debt-ridden countries Crude Oil The impact of Japan's earthquake is huge, as the demand/supply balance of the energy market has also been disrupted. As reported so far, 12.5 GW of Nuclear power generation capacity, or 26% of total available capacity, and 935K BPD of refining capacity, or 20% of total, are shut down. Due to closures in refiners and restricted imports, regional Crude Oil prices will come under pressure, but the impact on Crude Oil prices will be temporary I believe. So, expect to see upsides again as soon as refineries resume operations + continued disruption in Nuclear generation during the time frame will place more upward pressure on Crude Oil prices IMO. Saudi Arabia's Day of Rage turned out to be a non-event Friday as the government deployed police to prevent any riots from escalating.

The government has increased social benefits in order to stem any protest there. Savvy observers believe that demonstrations in Saudi Arabia will not evolve to events similar to those in Egypt and Libya. Although Saudi Arabia it has similar demographic, and employment pressures as Egypt, the King can easily hand out money to calm people down. Saudi is a conservative Kingdom and there is almost no organized social movement has occurred there before. The Overall Technicals Comex Gold (GC) Gold was confined to consolidation trading last week and fell to 1403 before recovering. A short term Top is in place now at 1445.7 and I expect a deeper retreat towards 38.2% retracement of 1309.1 to 1445.7 at 1393.5, or further to 55 days EMA, now at 1386.5 ahead. But, expect Strong support at 61.8% retracement at 1361.3 and bring on a rebound, at least on initial attempt to rebound. On the Upside: a clear break of 1445.7 is needed to confirm the rally's resumption. Barring that I am Neutral to mildly Bullish, and expect more consolidation in here. The Big Picture: Gold is comfortably inside its long term rising channel from 681, the 2008 low, and there is no clear sign of a reversal yet. Instead, the weekly MACD is supported by its trend line and Gold is possibly regaining its upside momentum. So, I am Neutral to Bullish as long as 1309.1, the Key support, holds and expect the current up-trend to target 1500, the Psych level, next. The Long Term Picture: the rise from 681 is treated as resumption of the long term up-trend from the Y 1999 low of 253. The 100% projection of 253 to 1033.9 from 681 at 1462 is almost met but there is no sign of reversal yet. So, sustained trading above 1462.6 likely paves the way to 161.8% projection at 1945.6 in the longer term. Stay tuned...

Comex Silver (SI) After fading to 34.05, Silver drew Strong support from the near term rising channel as well as 31.695/34.33 , the Key support zone, and rebounded strongly. Near term Bullish outlook is intact and a clear break of 36.74, the current high, will confirm the up-trend resumption for 100% projection of 17.735 to 31.275 from 26.3 at 39.84, which is close to 40, the Psych level. On the Downside: a break below 34.05 will bring on deeper correction IMO. But, I expect Strong support from 31.52, the 50% retracement of 26.30 to 36.74 at 31.52, to contain any downside. The Big Picture: the long term-up trend in silver is still on, and is regaining momentum with weekly MACD back above signal line. This rally will target the 200% projection of 8.4 to 19.50 from 14.50 at 36.85 next and will likely extend further towards 261.8% projection at 43.71. A clear break of 26.30, Key support, is needed to be the 1st signal of a reversal. Barring that my medium term POV is Bullish on Silver. The Long Term Picture: Silver's up-trend from the Y 2001 low of 4.01 is still on. That said I am Bullish as long as 21.44, the Key resistance turned Key support, holds and expect this up-trend to extend further to 161.8% projection of 4.01, the Y 2001 low to 21.44, the Y 2008 high, from 8.4 the Y 2008 low at 36.6 next and then 261.8% projection at 54.03. Stay tuned...

Nymex Crude Oil (CL) Crude Oil's pull back from 106.95 extended last week and breached 100, the psych level. The development indicates that a short term Top has formed on the Bearish divergence condition in 4 hrs MACD.

Initial bias remains to the Southside this week for deeper fall towards 95.62, the cluster support; 50% retracement of 83.85 to 106.95 at 95.40. But, Strong support should come in there and bring on a rebound. On the Upside: a clear break above 103.33, the minor resistance, will turn bias Neutral and bring on a recovery. But, a clear break of 106.95 is needed to confirm up-trend resumption. Barring that I expect to see more consolidation. The Big Picture: the medium term rebound from 33.2 is still on, and is possibly re-accelerating in here. Stronger rise should be seen towards 100% projection of 33.2 to 83.95 from 64.23 at 114.98. But, there is no change in my POV that this rally is the 2nd wave of the consolidation pattern from that started at 147.27, the Y 2008 high. So, I will on the watch for a reversal signal above the 114.98 projection level. A crack of 83.85, Key support, is needed to be the 1st sign of a medium term reversal, and a break of 64.23 is needed to confirm that action. Barring that my overall outlook is Bullish. The Long Term Picture: the rebound from 33.2 may not be finished, but my overall POV is unchanged, as I believe that Crude Oil is in a long term consolidation pattern from 147.27, with the 1st wave completed at 33.2, and the 2nd wave unfolding. A clear break of 64.23, the Key support, will confirm that the 2nd wave is finished, and the 3rd wave (a downward wave), should have begun. Stay tuned...

Paul A. Ebeling, Jr. writes and publishes The Red Roadmaster’s Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world. Ebeling has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels. Paul Ebeling is a CO-Founder of Ebeling Heffernan Asia’s fastest growing Advisory Firm and is a Senior Dark Pool FX, Equity and Commodity Analyst at Heffernan Capital Management.

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Gold, Silver and Oil, GLD, IAU, SGOL  

Gold, Silver and Oil, GLD, IAU, SGOL

Gold, Silver and Oil, GLD, IAU, SGOL  

Gold, Silver and Oil, GLD, IAU, SGOL