Issue Date: September 25, 2009
Where Is That Elusive Pot of Gold?
Gold futures spent the entire summer trading between $910 and $990 before breaking out through the top side in early September. The recent high in the Dec gold contract stands at $1025 which represents a new high for the year. The previous high was $1015, established in February. The high for the gold market in 2008, before the impact of the recession was $1014, established on March 20, 2008. Thus, the recent move in gold into fresh highs is significant from a technical stand point. Currently the December gold contract appears to be consolidating in the $990 to $1020 range. A strong close above the high end of this consolidation will signal another leg up to the next target of $1055.
By Dennis Smith
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Maybe Supplies Still Matter
I did not think it possible but it was almost like the weekly Energy Information Agency report from the Department of Energy actually over shadowed the Federal Open Market Committee announcement on interest rates. Oh no! We have to focus on supply and demand again. Yikes! All right I guess it was hard to ignore some stunningly bearish EIA number but could the Fed be signaling that the economy is getting better be a bearish development in the energy patch?
Let’s start with the EIA numbers. While in all the press surveys we called for an increase in crude supply, most were calling for a draw. So the market was expecting a big drop, yet instead they got a big build. The EIA reported that U.S. commercial crude oil inventories increased by 2.8 million barrels putting US crude supply at a bulging 335.6 million barrels. That number puts us well above the five year average and a healthy 10.6 percent above last year’s levels.
By Phil Flynn
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Wheat Bounces Off Recent Lows
The wheat markets continue to chop around in a range just above the lows established in mid-September. The inability of the bears to press these markets through the recent lows has resulted in short covering. In spite of this, the fundamental outlook of the wheat market remains negative as global supplies are ample and demand is questionable at best.
I have been selling rallies in the wheat market for quite some time and it has worked, however, I have become much less aggressive over the last couple of weeks. The reasons for my change in strategy are many.
First off, the failure to breach the recent support levels indicates that many market participants are not willing to press the market near these levels. This does not seem to have much to do with the fundamentals of wheat.
By Brian Henry
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