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Mid Week Report Gold, Silver, Base Metals and Crude Oil 24 February 2011

Red's Mid-week Gold, Silver and Crude Oil Report + the USD Charts by Omega Research

Paul A. Ebeling, Jnr. 24 February 2011 The Overall Fundamentals The Gold price was firm in Euro session, and failed to beat yesterday's high. Despite traditional negative correlation, Gold and USD has been moving in tandem since the outbreak of the chaos in Egypt. The situation augers risk aversion in the market, and players quest for safe-haven assets. Protests were also seen in Algeria, but the government said that 'Domino Effect' would not apply to the country. If the Egypt-styled unrest spread to Algeria, European markets will be more affected since the country is a large source of the continent's Nat Gas imports. Apart from geo-political tensions, Gold prices were supported by news of Strong physical demand. According to the Hong Kong Census and Statistics Department, outflows of Gold from Hong Kong to China doubled to 118.904 metric tons in Y 2010. A senior industrial official in China said that Gold imports rose almost 6 times to 200.72 metric tons in the 1st 10 months of Y 2010. BOE's minutes for the February meeting unveiled another policymaker voting for a interest rate hike in the face of elevated inflation. The vote remained to be 3-split with the majority voting for maintaining the status quo. The minutes indicate that policymakers are facing some additional pressure to tighten monetary policy even though growth in the UK is still subdued. The USD fell against major currencies in late New York trading Wednesday as the Euro and the GBP rose on speculation of interest rates raise. The Euro rose above the 1.37 level against the USD, and the GBP rose to 1.6200 vs the USD in late trading session Wednesday. However, players were reluctant to sell "Greenbacks" quickly as they are concerned about the risks caused by the chaos in Libya. The Dollar Index fell to 77.480 from 77. 784 late Tuesday.

The Overall Technicals Comex Gold (GC) With 4 hrs MACD crossed below the Signal line, a temporary Top formed at 1411.5 and intra-day bias has turned Neutral. But, another rise is expected as long as 1370, the Key support holds. And tha rise should head towards 1432.5, the high. The choppy look of this recovery says that it should be corrective in nature. So, I do expect Strong resistance below 1432.5 to limit the upside, and bring another decline to extend the consolidations from 1432.5. On the Downside: A clear break of 1370, the Minor support, will turn the bias back to the Southside for a move to 1309.1, the Key support. The Big Picture: last week's Strong rebound from 1309.1 augers that price actions from 1432.5 are consolidation in the larger rally. Gold is still staying comfortably inside the long term rising channel, and 1432.5 may not be the important top yet. But, even in case of another high above 1432.6, I will to look for reversal signal as Gold approaches 2 important projection targets, 161.8% projection of 931.3 to 1227.5 from 1044.5 at 1449.6 and 100% projection of 253 to 1033.9 from 681 at 1462. On the Downside: a clear break of 1309.1, Key support, is now an important signal of medium term reversal, and should bring pull back towards 1044.5/1227.5, the cluster support Zone. Stay tuned...

Comex Silver (SI) Intra-day bias in Silver is sill Neutral, and more consolidations could be seen below 34.33, the temporary Top. But, another rise is expected as long as 31.64, Key support, holds. This rally should extend towards 36.6, the medium term projection target, next. On the Downside: a clear break of 31.46 will indicate short term topping, and should bring a deeper decline. The Big Picture: the current developments indicate that the long term rally from 8.4 has resumed. Outlook will now remain Bullish as long as 26.30, Key support, holds and current up-trend should extend to 161.8% projection of 4.0, the Y 2001 low, to 21.44, the Y 2008 high, from 8.4, the Y 2008 low, at 36.6. Note: the rise from 26.30 could be the 5th wave of a 5 wave sequence from 14.65 (19.845, 17.735, 31.275, 26.3, and ?). So, I will be cautious for signs of loss of momentum as Silver enters into 34.67/36.6 projection Zone. Stay tuned...

Nymex Crude Oil (CL) I now expect a further rally in Crude Oil as long as 90.05, Key support, holds. Crude Oil is in a medium term up-trend, and should be targeting 100 psych level next. On the Downside: a clear break below 90.05, Key support, will suggest short term Topping, but outlook will remain Bullish as long as 83.85, Key support, holds. The Big Picture: this current development says that medium term rise from 33.2 is still in progress. The rally is treated as the 2nd wave of the consolidation pattern that started at 147.27, he Y 2008 high. A further rise could still come to the 61.8% retracement at 103.70 and possibly higher. On the Downside: break of 83.85, Key support, is needed to be the 1st sign of medium term reversal, and break of 64.23 is needed to confirm that action. Barring that, my outlook is Bullish Crude Oil. Stay tuned...

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Report, Gold, Silver, Oil, USD  

Report, Gold, Silver, Oil, USD

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