This emerging market thing is providing some support to the gold market and preventing it from moving sharply lower as lingering fears are bringing in some dip buying. However, when the US Dollar firms, it attracts selling.
Silver seemed to shrug off weakness in gold as well as copper taking its cues from some general commodity market strength across the softs and grains. Sugar and Coffee both had big up days today. Beans moved higher along with the grains and hogs were strong. So far, support near $19 has been holding but the market is definitely attracting strong selling near $20. If emerging market fears begin to increase, I think silver could slip below $19, especially if copper and the other base metals respond negatively. Remember, any sort of slow down related to emerging market fears is deflationary in general and silver, even more so than gold, will struggle in that environment. It needs a solid - RISK ON" appetite tied to strong growth sentiment leading to inflationary pressures. Without it, no one wants to own it right now above $20.
Natural gas was weak while heating oil and unleaded gasoline parted ways today. The former was up with the continued cold weather while the latter was down. Hey, maybe everyone looked at those photos of cars stranded outside Atlanta and figured if they weren't going anywhere, they sure as hell didn't need any gasoline in the tanks! These weather markets can be notoriously volatile for as soon as a forecast shifts, everyone who bought heating oil or nat gas on cold fears are suddenly on the wrong side of the market. They can fall as fast, if not faster, than they went up so if you are trading these, be careful.
It is exactly what happens to grain traders on the wrong side of a summer forecast! No one asks any questions or thinks - they just panic and run. By the way, this somehow is confused with trading for some reason.
Take a look at the following chart of the US Dollar on a weekly basis and you can see that the price action of the last three weeks has been of the whipsaw type. Up - down - up. If you look only at the short day to day stuff, it will drive you batty; however, on this weekly you can see that the Dollar moved down towards the lower portion of the upward sloping price channel and now appears, for the moment, to be working its way back up again.
There is certainly no clearly define STRONG trend but more of a gradual grind higher. I would keep an eye on the 79.50 level. It has not had a weekly close below there since October of 2013. If it did, it would portend a test of 79. I would think that would coincide with a move through $1280 for gold. The flip side is if the Dollar were to push through 83 on the upside, gold will more than likely not hold above $1200. The jury remains out therefore.
Take a look at the 4 hour gold chart and you can clearly see where sellers have gotten aggressive - that is up near $1,280. When it tried to extend past $1,270 on Wednesday and failed, that was it as far as some of the shorter term oriented longs cared - they were out and down she went. There was another push to $1,255 that also failed to extend and back down it went again. The market is trying to hold $1,240 and so far is succeeding but it does look heavy to me. Without an escalation in the emerging market crisis over the weekend, it is doubtful that gold is going to have much in the way of friends, especially if equities keep shrugging off any worries. Sentiment can flip on a dime however so just be prepared for lots of ups and downs.
The daily chart is noteworthy in the sense that the ADX, which was showing the possibility of a fledging uptrending move, has now flattened out again indicating that the upward progress is stalling out. The +DMI has turned lower, and while it still remains above the -DMI revealing that the bulls have control of the market on the daily time frame, it is now falling. This market could go either way but remember that on the weekly chart, the intermediate time frame, the bears are in control and thus the reason I have been citing that rallies are going to be sold.
Speaking of a weekly chart - here it is. Notice that the Bears are still in control of the market as -DMI remains above +DMI although is continues to fall. The weekly ADX is also dropping as can be expected in a trendless market.
Next week will bring the beginning of the delivery process in gold for the February contract. I will keep an eye on it to see whether Morgan continues to issue gold as they did in January or returns as a large stopper as they did in December.
One last chart for now - Goldman Sachs Commodity Index in a weekly view.
The gradual decline continues to extend. It is a slow, methodical move lower. The sector has garnered buying support which is keeping it from falling apart but it lacks any sort of upside vigor at the moment.
Lastly - this is to save myself a bit of work answering emails about the KWN Metals Wrap. I have no idea when or if it will return right now. If I hear anything concrete, I will let the readers know.
I will try to get some charts up or comments on the COT stuff later on as time permits.
Have a good weekend all... Go Hawks....