Commodity Snapshot

Below we highlight our trading range chart for ten major commodities.  In each chart, the green shading represents between two standard deviations above and below the commodity’s 50-day moving average.  Moves to the top or bottom of this range are considered overbought or oversold.

As shown, oil is trading pretty much in neutral territory at the moment after bouncing off of oversold levels a month and a half ago.  Gold has moved down from overbought levels over the last week, and the metal is now closer to the bottom of its range than the top.  Silver and platinum are in similar situations.  Natural gas has pulled back some after moving into overbought territory a few weeks ago.  Looking at some of the agricultural commodities, corn is attempting to break out of a long-term downtrend, while wheat already did so after spiking recently.  Both coffee and orange juice have done pretty well lately.

Source: http://www.bespokeinvest.com/thinkbig/2010/7/7/commodity-snapshot.html

Gold bullion surging in all currencies

With the gold price scaling fresh peaks and closing in on $1,100, it would certainly seem as if renewed interest in the yellow metal is being stirred up, especially subsequent to the purchase by India’s central bank of 200 metric tons of gold from the International Monetary Fund.

As printing presses are running at full speed to produce ever-increasing quantities of fiat money as governments engineer the greatest asset price reflation in human history – and the US greenback is heading South – the longer-term fundamental case for the yellow metal is arguably positive.

“The gold bug has caught several big hedge fund managers this year including John Paulson of Paulson & Company, Kyle Bass of Hayman Advisors and David Einhorn of Greenlight Capital, who believe enormous monetary and fiscal stimulus that has been injected into the global economy will eventually result in hyperinflation,” said The New York Times.

The gold price is not only making headway in US dollar terms, but also in most major (and minor) currencies as illustrated by the table and graph below. This is a manifestation of increased investment demand, whereas the initial rise in the gold price from its low in 2001 ($250) was mostly a reflection of US dollar weakness.

Illustrating the message even more vividly, is the chart below of gold expressed in a basket of emerging-market currencies by dividing the dollar bullion price by the Wisdom Tree Dreyfus Emerging Currency ETF (CEW).

The shorter-term technical picture is also looking interesting.

Seasonally, the period from November to December has traditional been good for gold, with average gains ranging from more than 1% to almost 2.5% since 1970.

I remain bullish on gold in the medium term, especially as I believe the vast money printing by central banks could set off strong inflation pressures down the road. I will not be surprised to see bullion remaining in a secular uptrend in the medium term. Add bullion to your portfolios, but given the notorious volatility of the metal only do so on pullbacks.

Research: Prieur du Plessis

Gold Soars to New Highs

The price of gold has broken out to another new high this morning following news that India’s Central Bank purchased 200 tons of the metal from the IMF. Previously, the IMF had announced that it would sell around 400 tons, raising speculation that the planned sale would cause a glut of gold in the market. Based on India’s $6.7 billion 200-ton purchase, the market may have an easier time digesting the increased supply than previously thought. The average price per ounce for the Indian Central Bank’s purchase works out to around $1,045. With gold now trading at $1,079, they have already made $218 million (3.25%). Not bad for a few days work!

Source: Bespoken Research

Commodity Snapshot

Below we provide our trading range charts of ten major commodities.  The green shading represents two standard deviations above and below the commodity’s 50-day moving average, and moves above or below this range are considered overbought or oversold. 

As oil has moved to the bottom of its trading range in recent weeks, natural gas has finally moved to the top of its range.  Natural gas also just broke above its one-year downtrend line, and now traders will focus on resistance that was made at its highs earlier this year.

Metals have settled down over the past few days as the dollar has ralllied.  After trading above $1,000 for a short time, gold has moved back down to $992.  Corn and wheat remain in downtrends, while the breakfast drink commodities (orange juice and coffee) have charts that look like a heart-rate monitor with multiple spikes and falls over the past few months.

Source: Bespoken Research

Gold Breaks $1,000

While the current price of gold ($1,005) is not at an all-time intraday high, if it holds onto these gains throughout the day, it will be at an all-time closing high.  Even with the potential for a record high close, gold’s current run to $1,000 has been met with a lot less fanfare than the prior two runs.  They say a watched pot never boils, but once you take your eye off of it…

Source: Bespoken Research

Gold Breaks Downtrend And Dollar Breaks Down

Gold is up another $12.40 today to $939/ounce.  Ever since the metal hit support at its 200-day moving average in April, gold has been rallying nicely.  And based on technicals, gold has quite a bit of room to run on the upside before it starts to hit resistance again.  As shown below, when the metal broke its multi-month downtrend at the start of May, it turned the technicals from negative to positive. 

Gold’s gain has coincided with the Dollar’s demise.  The Dollar tried to mount a comeback after taking a big hit in March, but it didn’t get close to a retest of its 52-week highs.  Once it tested and failed at support levels a couple of weeks ago, the trend turned from neutral to negative.  The next area of support for the Dollar doesn’t come into play until it gets down to its December lows.  For now, investors should play the stocks with high international revenues as a play on the decreasing dollar. 

Souce: Bespoken Research

ASX Stock and CFD Report 12-05-09

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The SFE Futures suggested a 51 point fall in the market. BHP and RIO down in ADR form overnight – 2.57% and 2.44% respectively. (BHP closed at the equivalent of 3503c, down 25c on yesterday’s close.) Metals all down overnight – Copper down 2.56%, Zinc 0.84% and Aluminium 0.32%. Nickel down 2.66%. Oil price down 79c to $57.79. Gold down $1.40 to $913.50. Bonds up with the 10 year yield down to 3.1736%. A$/US$ down to 75.90c.

Last week the banks had massive rallies so a pull-back is not a surprise – Wells Fargo was up 43.7% last week alone and JP Morgan was up 19.9%. Multiline Insurers and life and health insurers were hit the hardest – down 7.5% and 10.5% – down on the continuing debate over healthcare reform and the impact it will have on the industry. Tech stocks just up – Microsoft down 0.5% as they announced they will be raising cash through a debt issuance – didn’t reveal what amount they would raise, but last September noted they could take on up to $6bn in debt – Microsoft has $25bn in
cash. Telecom stocks comprised the only sector making a mentionable gain – AT&T will buy $2.35bn in assets from Verizon. Energy stocks down on the lower oil price after Fridays strong session – Occidental Petroleum down 3.7%. Ford Motors announced a public offering of 300m shares of common stock to partly fund the retiree health care trust.

The market is down 58. The SFE futures suggested a 51 point fall in the market this morning. Most sectors down. Resources and industrials getting hit the hardest – down 2.3% and 2.8%. BHP and RIO down 2.6% and 1.2%. Property trusts doing OK – up 0.2%. Energy  stocks down 1.7% after recent strong gains. Gold stocks mixed – NCM and LGL actually up despite the lower gold price overnight.

Active Trader Breakout Signals for Gold, Silver and Oil

by Chris Vermeulen

Gold, Silver and Oil breaks out to new multi week highs and shows signs of more strength to come. The charts below show both weekly and daily trading analysis pointing to higher prices for these commodities.

Weekly Gold ETF Trading

Gold closed on Friday at a 5 week high, breaking above its resistance trend line on the weekly chart. Weekly chart pattern breakouts carry much more momentum behind a move, than daily charts. This chart of gold (GLD fund) clearly shows a weekly breakout in the price of gold.

Also, I have drawn what appears to be a very large reverse Head & Shoulders pattern. It is this pattern, which is pointing to a much higher price for gold. The measured move for this pattern is the distance from the Bottom (head) to the top (neckline), which is about $300 per ounce. If we see this chart break above the neckline over the next few months, then most technical traders will be buying gold up to $1300 per ounce, which would be the next major price target.

Weekly Gold ETF Trading – GLD ETF Fund – Price of Gold

Daily Gold ETF Trading

The daily chart breaks down the price action even more, allowing us to see the price movement for each day. This chart looks to be very strong, generating a buy signal for gold.

The $HUI:GLD indicator shows gold stocks are out performing the price of gold, which is very positive. The MACD and stochastic indicators are currently on a buy signals as well. When we combine these indicators with current price action, trend lines and risk management, we can find low risk entry points for trading in and out of gold.

Daily Gold ETF Trading – GLD ETF Fund – Price of Gold

Weekly Silver ETF Trading

Silver has much of the same price action as gold. Both are considered a safe haven and seem poised to move higher over the intermediate term. The weekly chart below shows silver breaking above its resistance trend line and surging higher in price.

Sometimes I see silver as a leading indicator for the price of gold. Gold only moved higher by 3.5% on Friday while silver surged over 12%. I expect to see gold catch up over the next week as new traders/investors see these clear breakouts.

Weekly ETF Trading – SLV ETF Fund – Price of Silver

Daily Silver ETF Trading

The daily chart for silver looks strong as well, but could be a little ahead of its self. We may see is pause for a day or two before continuing its move higher.

Daily Silver ETF Trading – SLV ETF Fund – Price of Silver

Crude Oil Trading

The last week in oil was exciting with prices breaking out and starting to run higher.  The cup & handle pattern for oil can be seen best looking at the daily chart. The measured move for the price of oil looks to be around the $75 level and then $85 after that. The cup & handle pattern is one of most powerful bottoming patterns and I expect oil will trade higher for some time.

Weekly Oil Trading – How to Trade Oil (USO, USL) – Price of Oil

Daily Oil Trading

The daily chart shows a clear picture of the cup & handle pattern. During this pattern, we have had two buy signals. I like to wait for low risk entry points when risk is under 3% and currently downside risk for trading oil at this level, is around 8%.

Waiting for low risk entry points with clear exit points is critical for trading commodities. Every one can buy gold, silver and oil but most don’t know when to cut losses, take profits or when to add to a winning position. That is what I focus on when trading these volatile commodities.

Daily Oil Trading – How to Trade Oil (USO, USL) – Price of Oil

TheGoldAndOilGuy’s Trading Conclusion:

The commodities market has been extra volatile the past 9 months making it difficult to have low risk setups. We have been getting several buy signals but not as many setups to actually put money to work because risk has been over 3%.

I think these commodities gold, silver, and oil are poised for a nice move higher. I just want to mention I am not a gold or silver bug always thinking they will rally to ridiculous prices like $8000, which several forecasters are shouting out. I like to follow the price one – two moves at a time then review the current situation.

That being said, with the global economy not looking to hot, it puts gold and silver in a great situation. Countries, and private investors and traders are accumulating precious metals, as protection from falling currencies and will most likely continue doing this for some time, which will continue to push gold and silver higher.

If the broad equities market rolls over, I expect to see gold move higher with money moving into these safe havens. So, I think the odds are good for prices to rise over the next 4-8 weeks.

Oil appears to be in a similar situation. If oil prices continue to climb, I expect it will put a damper on the equities market, which will help push gold and silver higher.

While I would like to see prices move higher for all investment types, it’s important that traders and investors protect themselves from substantial loses. I focus on following price action, volume, momentum, risk management (Low Risk Setups), portfolio allocation and some fundamental data, but in my opinion most fundaments have gone out the window

Gold, Silver and Oil Special Trading Report 5-5-09

by Chris Vermeulen

Gold & Silver Special Trading Report

Gold and silver have been making a nice controlled pullback since their high in February. With precious metal prices drifting lower making clean looking waves like these it’s generally a sign of profit taking before another move higher.

In my opinion the broad market is over bought and has been for about 2 weeks. With most sectors Bullish Percent Charts at levels of previous intermediate tops (4-6 week cycles) it’s important that we tighten our stops on current trades and be ready for playing the down side for broad market equities.

When the board market starts to slide I expect to see money move into gold, silver and precious metals stocks. I do not think we will see a huge slide in prices for the DOW and SP500 but it’s very likely we could see prices pull back 10-15% from these current levels.

When people start to panic and worry about prices dropping again, money will start to flow back into gold and silver. Both of these metals are great to trade but I would like to note that silver is not as widely owned as gold, so it tends to move a little more freely. When money moves in, it surges higher and when money is pulled out of the metal it drops like a rock. A great fund for trading a combination of these metals is the CEF fund as it owns both gold and silver bullion (57% Gold, 39% Silver, 4% Cash).

Silver Bullion ETF (SLV)

Gold & Silver Trading Conclusion:

Trading these metals has been more difficult the past few months due to volatility. It looks as though the markets are starting to settle down. Currently gold and silver are trading in the mid to upper area of their resistance trend lines which means buying at this level carries much higher risk if the trade is to turn and go against you.

Knowing when to exit a trade your trade is one of the most difficult tasks of trading and the part 97% of traders do not do correctly. Protecting your money and or gains is critical. Many times I will exit trades at break even and try again on another setup instead of watching a small winning traded turn into a losing trade.

That being said those of you who are buying at these levels be sure you know your exit points and stick to them. I’m expecting a big move in gold and silver but it could go either way.

Special Oil Trading Report

The energy sector has been beaten down hard over the past 8 months. Since November it looks like it has been bouncing along the bottom with investors buying on the dips when dividends are high and prices are dirt cheap for many solid companies.

I must point out that the broad market and energy stocks look over bought and ready for a sharp pullback any day now. But if oil breaks out above $55 and starts rallying higher energy stocks will follow suit. Keeping our eye on crude oil prices is key here.

Oil Services Stocks Forming a Rounded Bottom Pattern

Light Crude Oil Trading Chart

Weekly Reversal Signal

This Oil Fund has created an intermediate buy signal as of Friday’s close. It appears the price action for this fund is signaling a reversal. The long lower candle wick which was formed two weeks ago touched our support trend line and rallied strong into the close.

Then last weeks move higher completed the reversal candle. Risk for entering this trade is about 11% if you set your stop below the support trend line. I only focus on the daily charts and enter trades with 3% or less risk.

USO Crude Oil Trading ETF

Oil Trading Conclusion:

Oil and energy stocks look to be forming a bottom which is a great sign for oil and other energy products like natural gas.

Oil service stocks have been climbing for several weeks and look ready for some type of pullback. It could be a sideways move or a quick 2-3 day drop.

Crude oil prices continue to hold a solid cup & handle pattern as we wait to see which way prices will breakout. Waiting for a low risk setup in our trading funds is difficult but it must be done to keep our risk: reward ratio in line.

I posted a weekly chart of the USO Texas Oil fund because many you trade this. This weekly chart looks very bullish because over the past two weeks we have had a reversal pattern form. This type of setup is for longer term traders who carry more risk and provide more time for trades to mature.

ASX Market Report 1-05-09

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The SFE Futures suggested an 18 point rise in the market. BHP and RIO both up in ADR form overnight – 0.80% and 3.15% respectively. (BHP closed at the equivalent of 3318c, down 8c on yesterday’s close.) Metals up overnight – Copper up 1.40%, Zinc 0.99% and Aluminium 2.54%. Nickel up 3.32%. Oil price up $0.16 to $50.35.
Gold down $9.30 to $891.20. Bonds down with the 10 year yield up to 3.1197%. A$/US$ down to 72.525c.

Financials down 0.8% – banks were sold off after gains yesterday. The House has passed a credit card law to prevent companies from suddenly boosting interest rates and to curb their more crafty practices. The government’s results from the stress testing of the banks will be delayed as examiners and executives debate the preliminary findings.
Energy stocks down the most – fell 2.1%. Oil and gas drillers down 3.5%. Big integrated companies like Exxon Mobil also brought the sector down – Exxon finished down 2.6% on a quarterly earnings report that fell short of expectations. Both Exxon and Marathon Oil posted quarterly profit over 50% below that posted in the same quarter a year ago – it was only last year than Exxon, the most widely traded oil stock on Wall Street, posted record profits – it was their worst result in 5 years. Doesn’t bode well for the oil sector’s impending results. Chrysler filed for chapter 11 bankruptcy – will temporarily halt most of its car production while completing a deal with Italian car manufacturer Fiat – a group of key creditors wouldn’t go along with Chrysler’s proposal to reduce $6.9bn in secured debt. Ford said the fate of Chrysler going bankrupt wouldn’t affect its own supply – up 9.7%.

Quiet day on our markets – down 10 points – a little disappointing considering the SFE Futures suggested an 18 point rise. Resources down 0.7% with BHP and RIO down 1.1% and 1.7%. Property and industrials down 0.3% and 0.1%. Financials up 0.2% – banks mostly up – NAB up the most at a 1.1% rise. Gold stocks down on the lower gold price overnight.

Crude Oil and Gold

With Crude Oil and Gold being in the spotlight last week, especially against purchasing news out of china, we still need to keep our feet firmly planted on the ground as we take a look at the facts.

Looking at the raw data on Crude Oil provided by the EIA, it is very hard to be supportive of a bullish price action for the near term.  Crude Oil, Distillate’s, Gasoline and Propane stocks all reflect a much higher cyclical average than previously seen for this time of the year.  This is underpinned by above average production level and Crude Oil days of supply.

Taking this into consideration, these types of builds would not be a cause for concern, provided of course, that we are in a situation where demand is on the increase.  According to the IEA, “Global demand is now forecast at 83.4 million barrels per day, 2.4 million less than 2008. The pace of contraction is close to early 1980s levels, with a growing consensus that economic and oil demand recovery will be deferred to 2010″. 

And even judging by the short term movements in demand, there is really nothing to suggest an increase in the present environment.  After all, China’s Crude Oil imports did fall by 5.5% from last year and their Gasoline imports being virtually none.

The recent price action paints a slightly different picture as we approach the top of the range for this year’s prices in WTI. Having seen the sharp rejection of the downside this week, good discipline will be needed in approaching any shorts.  But it is really hard to see why we should be anything but short, targeting a correction in prices over the next couple of weeks towards $41.00.

The Gold price action is very similar to that of Crude Oil over the past week.  However, there too, the upside does seem to be fairly limited.  Much of the upside coming on the back of news saying that China had increased their reserves by 76% since 2003.  I am slightly skeptical about all this talk, as to some extent it sounds like a bid to talk up the market and I am still of the persuasion that no one country is able to buck the market.

We need to remember that we are trading far from the lows in stocks markets, and even when the carnage on equities was at its bleakest, we failed to break higher ground in Gold.  In saying that, it brings to questions whether Gold should carry a high weighting in a general market portfolio.  With little upside potential in Gold, I still believe that Gold at 780.00 remains a realistic target in the near term.

In general, I think in our current market environment, keeping it real and sticking to the facts remains the prudent strategy.

Tricom Today Australian Stock Market Report 17-4-09

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The SFE Futures suggested a 40 point rise in the market. BHP and RIO mixed in ADR form overnight – BHP down 0.33% and RIO up 4.25%. (BHP closed at the equivalent of 3361c, up 42c on yesterday’s close.) Metals all down overnight – Copper down 1.87%, Zinc down 1.51% and Aluminium 2.18%. Nickel down 0.40%. Oil price up 71c to $49.97. Gold down $13.70 to $879.80. Bonds down with the 10 year yield up to 2.8368%. A$/US$ down 0.09% to 72.01c.

The market seems to be factoring in a stabilizing economy – the pace of new home construction seems to be nearing a bottom, initial jobless claims were down more than expected, and JP Morgan’s profits were better-than-expected – both Wells Fargo and Goldman Sach’s announced positive earnings reports. Financials rallied late and finished up 0.6% – JP Morgan led the way posting better-than-expected quarterly results. JP Morgan Stanley’s results did reveal higher loss provisions reminded the market toxic assets are still a core issue to deal with. Citigroup up 1% ahead of results which will be posted before the opening bell Friday. Regional banks got a boost – Regions Financial Corp up 34% saying it will post a profit for the quarter. Fifth Bancorp up 7%. Huntington Bancshares up 8.2%. Industrials were up 2.9% – General Electric up 3.7% ahead of their quarterly results tonight in the US. Technology stocks up 3.2%.
Consumer discretionary stocks up the most – up 3.4%.
The market is up 67. The SFE Futures suggested a 40 point rise in the market this morning. The All Ords is testing a 3700 resistance ceiling – technically the next target up is 3950. Zinc stocks flying again. Gold stocks struggling.

Tricom Today Australian Stock Report 9-4-09

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The SFE Futures suggested a 45 point rise in the market. BHP and RIO mixed in ADR form overnight BHP down 0.31% and RIO up 4.58%. (BHP closed at the equivalent of 3178c, up 36c yesterday’s close.) Metals all up overnight – Copper up 0.48%, Zinc 1.48% and Aluminium 1.15%. Nickel up 0.64%. Oil price up 0.5% to $49.37. Gold up $2.60 to $885.90. Bonds down with the 10 year yield up to 2.8596%. A$/US$ down 0.08% to 70.98c.

Nasdaq outperformed on the hope that a recovery in business spending will boost technology stock’s profits. IBM up 2.5% and Qualcomm up 2.2%. Security regulators voted to seek public comment on five proposals to curb
shortselling. Chrysler’s chairman said the government’s May 1 deadline for completing a deal with Fiat is “ample time”. Homebuilders up – Pulte Homes made a bid for Centex Corp from $1.3bn which would create the largest US homebuilder. Centex up 19% and Pulte down 10.5%. Bloomberg data suggests EPS across the S&P500 will fall 37% this quarter and another 30% next quarter. Juniper Networks preannounced quarterly results that were inline with expectations and the company’s prior forecasts.

The market is up 22. The SFE Futures suggested a 45 point rise this morning. All sectors bar telecom and healthcare up. Property leading the way – up 2.9%. Banks mixed – NAB down 1.4% and CBA up 1.4%. BOQ down 4% on 1H results. Resources up – BHP and RIO up 1.3% and 1.5%. Major gold stocks down despite the $2 rise in the gold price.

Gold and Gold Stocks Riding a Thin Line

by Chris Vermeulen

This week in gold we have seen prices drop lower creating a lower low. This is generally not a good sign if we want to see higher prices in bullion and gold stocks. That being said, a lot of traders are now starting to short gold because is has filling its gap lower which occurred Monday at the open due to over night commodity prices.

I am refraining from this short term play because of several things:

1. Gold is still within its support zone and could reverse any day
2. Although we have a lower low this pattern could very well be a 1-2-3 wave retrace
3. Stochastic Indicator for gold is starting to turn up indicating possibly stronger prices
4. Gold stocks are currently at a short term support level

GLD Gold Fund Trading Chart

Gold Bugs Index (Basket of Gold Stocks)

Technical Trading Conclusion:

The price of GLD has been retracing since February after making its big run from $70 to $98. We all know the market moves in zigs and zags and some bigger than others. And we all know that large moves always require some type of pause whether it’s a sharp pullback, flag, Pennant, wedge or 1-2-3 retrace before continuing in the previous direction. Only time will tell what gold will do next. We simply must manage our exposure and focus on trading low risk setups when the momentum is on our side.

Gold Approaching 200-Day Moving Average

With a decline of 3% today, gold is on the verge of testing its 200-day moving average for the first time since early January.  With the exception of a one-day spike on the day the Fed said it would buy US Treasuries (3/18), gold has pretty much traded down in a straight line.  Even though most observers said the Fed’s action would lead to inflation down the road, the price of gold is now lower today than it was before the announcement. 

Source: Bespoken Research

Tricom Trader Australian Stock Market Report 6-4-09

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The SFE Futures suggested a 33 point rise in the market. BHP and RIO both up in ADR form Friday – 0.20% and 1.76% respectively. (BHP closed at the equivalent of 3447c, down 13c on Friday’s close.) Metals all up Friday – Copper up 3.64%, Zinc 2.85% and Aluminium 3.57%. Nickel up 3.31%. Oil price down 0.2% to $52.52. Gold down $11.60 to $897.30. Bonds flat with the 10 year yield at 2.8917%. A$/US$ down 0.02% to 71.57c.

Treasury’s Geithner said he’s prepared to change the directors and senior management of banks that are receiving considerable financial support from the government. He noted, by way of example, the change of CEO’s at AIG, Fannie Mae and Freddie Mac when they avoided failure through government intervention. Healthcare stocks down 1.6% – Congress intends to overhaul the healthcare sector. Research in Motion (RIMM) gave upside guidance and better-than-expected results at their quarterlies – Deutsche Bank upgraded RIMM. IBM’s acquisition talks with Sun Microsystems have stalled – the pending deal is unlikely to proceed tomorrow as was previously expected.
Europe’s biggest bank – HSBC Holdings – raised $17.7bn as the British bought shares in the largest ever rights issue.

The market is up 15 – was up 26 earlier. Financials up 1% after a strong session in US financials Friday. Industrials up 1.2%. Major miners down – BHP down 1.4% and Rio down 1.9%. The zinc and nickel sectors are flying on higher metal prices. Major energy stocks mixed. Gold stocks all down on the falling gold price. BEN struggling after its trading update – down over 8.6%.

Global Asset Allocation Summit

Tricom Today ASX Stock Market Report 31-3-09

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The SFE Futures suggested a 57 point fall this morning. BHP and RIO both down in ADR form, 6.2% and 5.7% respectively. Metals all down overnight – Copper down 3.4%, Zinc down 2.5% and Aluminium 1.83%. Nickel down 1.29%. Oil price down 7.5% to $48.49. Gold down $7.70 to $915.50. Bonds up with the 10 year yield down to 2.71%. A$/US$ down to 68.13c. Biggest fall in 3 weeks US Government rejects recovery plans from GM and Chrysler. Financials struggled on concerns that banks will need another capital injection. Realization that the recent bounce was good but the economy can’t recover overnight.

Oz Minerals (OZL) announces it has received an incomplete alternative bid from Minmetals that would result in them acquiring most of its assets apart from Prominent Hill mine. They say, “OZ Minerals has received an alternative incomplete proposal from Minmetals which, when completed, will result in Minmetals acquiring all of OZ Minerals’ assets except for Prominent Hill, Martabe and the company’s portfolio of listed assets. It also said it will make an announcement on refinancing negotiations before the start of trading tomorrow and will try to make a definitive announcement the new Minmetals deal. OZL still in a trading halt.

The market is surprisingly doing OK – down only 22 compared to the 57 point fall the SFE futures predicted this morning following heavy falls on Wall Street overnight. It seems we soaked up most of the damage yesterday. Aussie banks doing well despite their US counterparts getting smashed overnight, Resources down. Except gold stocks.

Gold testing downside support

“Just one week after the Federal Reserve devalued the dollar by announcing that they would start buying US Treasuries, one would think gold would be in rally mode and in overbought territory. However, while gold had an initial spike following the Fed’s announcement, since then the yellow metal has come back down to earth. Gold is currently close to testing its 50-day moving average, which is a level that has provided reasonable support over the last few months. If that level fails to hold, the next level of support is around its 200-day moving average at 859.”

Source: Bespoken Research

Gold Bounces Off Support Again and Internals Look Strong

By Chris Vermeulen

Gold bounces off support again today with some indicators pointing to much higher prices.

GLD Gold ETF Fund – Daily Trading Chart

This week gold has been pulling back after last week’s massive one day rally. Hopefully that rally was not a one-day wonder but rather a sign that smart money is still moving into gold and not most retail traders trying to make a quick buck.

Gold Stocks/Gold Bullion Ratio – Weekly Chart

This chart shows we now have a clean breakout, which is extremely bullish for the price of gold. This signal is not fully confirmed until we have the closing price Friday at 4pm ET.

GDX Gold Miner Stocks Fund – Daily Trading Chart

This chart shows a nice rally to the February resistance level with a small bull flag and a daily close above resistance. Wednesday’s price action is very bullish but our support trend line is much to steep for gold stocks to maintain. Those with a high-risk appetite may like this, but I prefer to wait for a more conservative setup.

The USD is Half Way Done It’s Move

The Dollar broke down sharply a few weeks ago and is now forming a bear flag chart pattern. This pattern generally forms at the half way point of a move. If the trend continues, we can expect to see much lower prices for the USD in the next 1-2 weeks.

Gold Trading Conclusion:

While gold bullion is looking a little top heavy, the internals like gold stocks and the USD are shouting the opposite. Gold is currently at support, which is generally a good place to add to positions. If the price of gold breaks down from here, there is a clean exit point, which is a daily candle close below the support level on the GLD gold fund chart.