Gold Meltdown
Gold – Gold futures are little changed this morning, but are trading above the $800 mark. Gold suffered the perfect storm of negative factors yesterday: technically overbought levels, lower energy prices, a sharply higher Dollar, and renewed fears that a U.S. slowdown could curb inflation. Traders may view yesterday's steep decline as a healthy correction following the accelerated run-up in recent weeks. Gold has bounced back from overnight lows on a weaker greenback, and the market may find longer-term support if the Dollar continues to trend lower. December Gold closed below the 9-day moving average, which could be seen as bearish near-term. Gold bulls may be encouraged by a bounce from the 18-day moving average and above the psychological $800 mark. Support comes in at the 38.2 percent Fibonacci retracement of 772.80 and 750, while resistance can be found at 825 and 850.
Crude Oil – Crude Oil futures are lower for the second consecutive day on an expected decrease in demand. The EIA slashed its expected demand for 2008 by 300,000 barrels a day due to record high prices. Crude Oil traders had a disappointing day yesterday due to continued subprime worries affecting the global economy, which could stymie demand and reduce inflationary pressures, making Crude Oil less attractive for speculators. Further talk of a possible OPEC output increase could keep prices lower. December Crude closed below the 9-day moving average, which can be seen as bearish near-term. Momentum is starting to lose ground and comes in at +7.22, well off of the +17.19 high. The 18-day moving average at 92.30 now comes into play, with a close below this level possibly signaling a near-term high in place. Support now comes in at 92.30 and 90.00, while resistance can be found at 94.50 and 96.55.
S&P – Stock index futures are higher this morning on stronger-than-expected earnings by Wal-Mart and Apple's plans to launch the iPhone in China. Stocks were battered once again yesterday, as subprime worries refuse to go away. There is a possibility that E-Trade will file for bankruptcy after the embattled brokerage firm indicated that write-downs will be much larger than previously anticipated. Tighter credit markets are likely to limit growth of the overall economy, which sparked the broad sell-off. The December e-mini S&P chart continues to look bearish, but the market was able to hold above key weekly support at 1435.00. Momentum is showing some slight bullish divergence from RSI, which indicates that the market may bounce near-term. Support can be found at 1435.00 and 1413.50, while resistance comes in at 1475.00 and 1500.00.
Rob Kurzatkowski, Commodity Analyst
