Commodities Update – 2nd February 2015

February 2, 2015 by

Monday 2nd February 2015 – 20:00

Gold: Gold traded 1266/1283 today in choppy fashion, falling to the lows before recovering to sit pretty much unchanged and more of the same looks possible given that the indicators are mixed. Fragile economic report from Asia’s largest economy dragged prices of most of the commodities to a lower range. An economic report from China earlier showed that Manufacturing Purchasing Managers Index in the region for the last month ticked down to 49.7 from a preliminary reading of 49.8. Due to this Gold prices are hovering between gains and losses as investors reassessed their expectation for the timing of the US rate hike, moreover growing concerns over the Greece’s future in the euro zone also triggered volatility. It looks as though we are in for more choppy trade over the next few sessions between 1255 support and 1310 resistance. Within that, 1265/1290 seems to have it covered for now, possibly until the NFP on Friday.

Silver: As with Gold, Silver took a dip to 16.99, before recovering, to sit pretty much unchanged on the day and more of the same sort of trade looks possible in the short term. The topside currently looks capped at 17.50 (100 HMA) above which could squeeze on towards the 200 HMA at 17.80, although doubtful. While the dailies point lower though, any near term rally would appear to be a sell opportunity for an eventual decline back towards the 100 DMA at 16.90 and then possibly towards rising trend support at 16.40

WTI: WTI had another strong session in reaching 50.58 today, albeit not before an early dip to 46.64, but was generally assisted by follow-through buying after Friday’s strong rally. It was a pretty volatile session though, and with the hourly indicators now at overbought extremes I would be surprised to see a break of today’s high, at least in the near term. The 4 hour and daily charts though, still suggest higher levels to come, so as with yesterday, I prefer to buy dips towards today’s low, looking for a retest of 50.50 and then the 15 Jan high at 51.25. Above there, could then see an acceleration higher, towards 52.15 and possibly to 53.25 or even 55.08 (2 Jan high).

Brent: Brent added $1.84 on the back of the climb in WTI. Brent swung in a band of about $4 a barrel, one of their widest in weeks, as near-term technical signals indicated further gains while fundamental data continued to weigh on the market. Profit booking at higher levels coupled with increased production from the OPEC schlepped Crude oil prices down by two percent in NYMEX. However, most of the market participants expect a bounce back in prices as labor unions in the United States called for a refinery strike which may disturb supply in the world’s largest oil consumer. Brent settled up $1.76, or 3.3 percent, at $54.75 a barrel, swinging between a session high of $55.62 and a low of $51.41.