Hedgers Nudge Gold to New Highs
Gold – April Gold futures posted a new record high this morning, as traders flock to precious metals as an inflation hedge. In addition to rising petroleum prices, the recent cold blast hitting much of the country has stirred the Natural Gas market from its slumber. Higher energy costs and a CPI report showing a higher-than-expected reading have more than offset the detrimental impact of yesterday's Platinum sell-off on the Gold market. The late-session buying in Platinum helped avert major chart damage, which should be supportive for the overall precious metals market. The daily April Gold chart shows the market breaking out of a wedge formation and penetrating resistance created by previous contract high close of 932.80. The measured move from the wedge formation suggests that the market may be ready to test the $1000 mark. Momentum continues to outpace both price and RSI, confirming a strengthening trend. Support comes in at 919.50, 901.30 and 886.40, while resistance can be found at 952.60, 967.50 and 985.70.
Crude Oil – April Crude Oil futures are trading below the $100 mark this morning ahead of the weekly petroleum inventory report, which is expected to show a weekly build of over two million barrels. The report itself is expected to be bearish for the Oil market, but may force OPEC's hand in lowering output. Today's activity figures to be choppy due to the report and the likelihood that some traders may be tempted to take profits after the contract jumped 13 dollars over the past nine sessions. Oil is a market that trades on perception, and the perception is that OPEC will slash production, even if an official word at the cartel's March 5th meeting is still up in the air. The actual supply and demand fundamentals for the market are actually quite bearish, with inventories building and domestic gasoline demand falling in December and appearing to drop in January and February as well. The Alon refinery outage is only expected to affect one percent of gasoline supply and will probably contribute to rising inventory levels. The spinning top pattern on the daily chart hints at consolidation or a small reversal. The RSI indicator is still overbought at the moment, suggesting the market may be sluggish in any further advance. On the other hand, momentum is screaming higher, outpacing both price and RSI, indicating a bullish near-term bias. Support comes in at 98.17, 96.65 and 95.30, while resistance can be found at 101.04, 102.39 and 103.91.
Rob Kurzatkowski, Commodity Analyst
