Gold Shines in Early Trading
Gold – December Gold is higher in early trading today after suffering losses over the past three sessions. The U.S. Dollar dropped to all-time lows against the Euro in overnight trading on expectations that this morning's housing starts and permits data will show further weakness. The recent slide in precious metals – despite firming energy prices – has mainly been driven by profit-taking and is generally viewed as a healthy correction for the market. Technical buying is also driving Gold higher, with the market finding support near the first Fibonacci retracement, which comes in at 772.60. The market was also trading near oversold levels on the RSI, helping attract buying interest. Momentum is showing bullish divergence from RSI, suggesting positive near-term sentiment. Tempering the positive technical factors is the crossover of the 9-day and 18-day moving averages, which is considered bullish in the short- to medium-term. Support can be found at 772.60 and 749.30, while resistance can be found at 800.00 and 819.40.
Copper – Copper continues its month-long slide ahead of today's housing data. Housing starts are expected to fall to 14-year lows, severely decreasing demand for the base metal. LME stocks have risen 15 percent over the past year and inventories jumped 350 tons today. The recent loan write-offs by banks has led to tighter lending standards, dimming the long-term prospects for Copper and suggesting that things may get worse for the housing market before we see a turnaround. The weakening greenback has done little to aid the market, which has been in a virtual freefall since peaking in early October. December Copper has fallen below key psychological support at $3.00 in early trading, but buying pressure seems to have emerged below this mark, helping to slow declines. Momentum is showing bearish divergence from the RSI, suggesting more downside is possible for the market. Support now comes in at 285.00 and 263.00, while resistance can be found at 315.00 and 330.00.
Bean Oil – Bean Oil futures finished the overnight session slightly lower, despite higher energy prices and a weaker Dollar. Chinese demand has jumped recently due to a smaller-than-expected Soybean crop, and the Chinese government has stepped up its stockpiling on the weaker Dollar. Near-record Crude Oil prices have also fueled speculation that bio-fuel demand will increase, further aiding Bean Oil prices. The weaker Dollar has also helped the market post strong export sales figures outside of China as well. December Bean Oil continues to trade in a sideways consolidation pattern near contract highs, suggesting a possible continuation of the uptrend. The 9-day RSI has fallen below overbought levels for the first time in several weeks and is outpaced by the momentum indicator, which is bullish over the near-term. In another positive development for the market, the December contract has found support near the 9-day moving average this morning. Support comes in at 43.75 and 42.50, while resistance can be found at yesterday's intraday contract highs of 45.26.
Rob Kurzatkowski, Commodity Analyst
