Gold – The Gold market is lower once again this morning after shedding over 15 dollars on Friday. The non-farm payroll figure released on Friday was very Gold-friendly, but a large European hedge fund is rumored to have sold off a large portion of its position in reaction to how the market behaved after the number. The market seems to be experiencing some follow-through profit-taking early in the session on a firmer Dollar and weaker energy prices. Several South African mines are now running at 90 percent of normal power use – up from 80 percent for much of last week – which seems to be weighing on the market. Longer-term fundamentals remain bullish, with the Fed focused on preventing a recession rather than trying to keep inflation in check. The Dollar Index is trading near support and a violation of the 74.75 level could fuel further declines, which would likely support precious metal prices. Friday's sell-off did little chart damage and the market has held support at 900 so far this morning. Momentum has slipped below the +50 mark, showing a somewhat weakening trend. Support comes in at 900.40, 887.30 and 866.60, while resistance can be found at 934.20, 954.90 and 968.
Crude Oil – The Oil market is lower this morning after dropping almost three dollars on Friday. OPEC's decision to keep output unchanged came as no surprise to traders, but the payroll data hints that the U.S. economy is either in recession or dangerously close to heading down that road. Inventories have climbed back to seasonal averages and the demand picture continues to worsen, both of which have been disappointing for bulls. Last Wednesday's inventory data showed Crude Oil and Gasoline inventories rising, despite lower refinery use. Consumers decreased the amount of money spent at service stations for the month of December and inventory data suggests that consumer spending on motor fuel will likely fall again in January. Outside markets have added to the petroleum market's woes, with metals prices falling and the U.S. Dollar holding up in the face of terrible economic data. Friday's sell-off hints at a new test of support near the $86 mark and it will be interesting to see if Oil bears can finally push prices below this critical psychological and technical level. Support comes in at 87.57, 86.19 and 83.91, while resistance can be found at 91.23, 93.50 and 94.89.
S&P – Stock index futures are little changed in overnight trading after rising sharply on Friday. The market was strong despite the payroll data, aided by Microsoft's bid for Yahoo and the 50.7 ISM number beating analyst estimates of 48.4 – a figure below 50 shows contraction in the economy. Earlier this morning, car and truck sales showed a decline from December's sales. The market is now focused on the only major economic release today – Factory Orders – which is expected to show an increase for the first time in five months. Friday's close above the 1390 mark can be seen as bullish for the market near term, but a close above 1425 may be needed to swing chart bias toward the bulls. Momentum is quickly approaching the zero line and is outpacing the RSI indicator, both of which can be seen as bullish. Support comes in at 1379.75, 1362.25 and 1353.25, while resistance can be found at 1406.25, 1415.50 and 1432.75.
Rob Kurzatkowski, Commodity Analyst