Golden Age
Gold – Gold continued to move higher, aided by a jolt in the energy sector. The spike in Crude Oil to record levels has benefited the precious metals sector, signaling inflationary times ahead. Traders – mainly outside of the U.S. – have been allocating funds to physical commodities due to the weakness in the Dollar, which has diminished returns on other investment products. With prices in other commodities such as grains looking a bit toppy, commodity bulls have allocated larger portions of their funds to the metals, especially Gold, which has seen a recent upswing in demand. December Gold broke through the key 61.8 percent Fibonacci retracement last month, signaling a possible test of 790.00. Gold technicals remain bullish overall, but the market is beginning to look overbought, as gauged by the RSI and slow stochastic indicators. Support can be found at 735.00 and Fib support at 717.20, while resistance comes in at 775.00 and contract highs of 791.00.
RBOB – Gasoline futures jumped to a new record high. Geopolitical tensions dominated headlines throughout the trading day, as Turkey maintained its stance that a military operation in northern Iraq’s Kurdish region is a possibility. This would likely interrupt both petroleum supply lines and U.S. military supply lines, drawing out the current conflict and adding additional war premium to petroleum prices. Prices have retraced a bit after making gains overnight on some profit-taking. Yesterday's close signals a breakout over previous highs, but the market may be tempered by an overbought reading on the RSI. The slow stochastics are closing in on overbought levels as well, which could signal a small turnaround or consolidation. Momentum remains very strong, coming in at +.1300. Support can be found at 2.10 and 2.00, while resistance would likely come in at 2.20 and 2.25.
Copper – Copper is trading slightly lower this morning due to lackluster starts in London and Shanghai. Copper has traded off the weakness in the Dollar and the prospect of higher U.S. inflation, with everything quiet on the labor front. Prices have been further aided by tight supplies of the base metal and soaring transportation costs. Non-commercial net longs have increased their position almost threefold over the past week, which marks the largest net long position in over eighteen months. After closing above the 3.70 resistance mark earlier this month, December Copper has broken down a bit, and a close below 3.58 could spark some long liquidation. The 9-day MA is in danger of crossing below the 18-day MA, which would be a bearish technical signal in the mid-term. Momentum remains strong at +.27 and the RSI is a neutral 49 percent. Support comes in at 3.50 and 3.42, while resistance can be found at 3.70 and 3.78.
