Planned IMF Sale Sends Gold Lower
Gold – Gold futures are lower for the third consecutive session after the U.S. Treasury Department announced that it would back the IMF's planned sale of 12.9 million ounces of the precious metal. Even with South Africa running at full capacity, production fell short of physical demand last year, so the move shouldn't flood the physical Gold market by any means. The move may actually support Gold prices over the long haul, as it could rejuvenate demand down the road if prices correct sharply. The precious metals market still has a host of bullish factors going for it, so the move by the IMF can be seen as somewhat bearish over the short to medium term. The daily April Gold chart remains bullish, but may be vulnerable over the short term if the contract suffers a daily close below 930. Momentum has outpaced price and RSI to the downside, hinting at lower prices over the near term. Support comes in at 932.40, 924.20 and 912.90, while resistance can be found at 951.70, 963.00 and 971.20.
Copper – Copper is lower for the third consecutive trading session after a huge two-day jump in LME inventories. Supply, rather than demand, has been the focus for traders of the yellow metal, and the 10 percent increase in stocks on Friday and Monday is considered by many to be bearish near-term. The LME reported stocks decreased 100 tons this morning. Despite the recent inventory spikes in London and Shanghai, the overall trend in inventories remains lower, which may support prices over the mid-term. Chinese demand remains robust, but there are many uncertainties in the U.S. and European economies. The three-day reversal on the March Copper chart hints at lower prices over the short term, possibly testing support in the 3.55-3.60 area. Momentum has remained stronger than both price and RSI, suggesting the recent selloff may be a temporary phenomenon. Support comes in at 3.6700, 3.6100 and 3.5110, while resistance can be found at 3.8295, 3.9190 and 3.9885.
Wheat – March Wheat finished overnight trading 43 cents higher, but sold off after the Minneapolis contract gave back $1.20 of yesterday's gains. Adding fuel to the recent rally, India announced that it plans to import Wheat for the third consecutive year due to poor crop conditions. Global demand figures to outpace production once again for the 2008 crop year, which could keep prices near records going into 2009. Friday is First Notice Day for March futures on all three major exchanges, which may result in even more volatile trading.
Rob Kurzatkowski, Commodity Analyst
