Commodities Crack
Cocoa futures were pummeled this morning, as overall weakness in the commodity sector in the wake of a rebound in the U.S. Dollar inspired speculative liquidation in the Cocoa market. A weaker British Pound against the U.S Dollar led to arbitrage selling in the New York market to start the session. Trade and origin selling followed, moving the market through support points at $2000 and $1980, and triggering speculative sell-stops along the way. Buyers were scarce as prices fell, with major support at the 100-day moving average of $1948 giving way to spark fresh short-term momentum-based selling. Buyers were found just above the $1900 area in the December contract, which put an end to the day’s losses. $1900 is seen as psychological support for December Cocoa, with resistance found at $1948. December Cocoa closed at $1917, down $113.
After hitting 27-year highs yesterday, Gold futures were ripe for a correction – and correct they did. Gold prices fell over $20 during the worst stretches of the session, as a commodity-wide sell-off hit Gold and the precious metals sector particularly hard. A rebound in world equity markets and a recovery in the U.S. Dollar made Gold investments less attractive to non-U.S. buyers. Moderate sell-stops were seen being triggered below support at $740.00. Despite the heavy selling seen today, technical damage was minimal, with the widely watched 20-day moving average holding and the long–term uptrend remaining intact. Continued speculation that the U.S. Federal Reserve is in an easing mode is fanning fears of rising inflation, which if uncovered in economic data going forward would be supportive to the precious metals sector, and Gold in particular. The next support point for December Gold is seen at $727.00, with resistance found at $747.00. December Gold closed at $736.30, down $17.80.
Mike Zarembski, Senior Commodity Analyst
