Consolidation at Yearly Highs

 |  Includes: GLD, OIL, SLV
by: The LFB

Global commodity markets have held the higher ground in trade during March, driven higher in part by the continued civil unrest from Middle Eastern regions, which have impacted food, precious metals, and oil supply and demand sentiment. The daily news headlines in regard to food shortages, and record increases in food prices, have been the main instigators of the civil unrest. In turn, that has allowed speculative interest to build on the long side of most commodity markets, which is something that has been empowered by continued weakness in the US dollar.

Gold is holding steady, with bullion trade finding support at 1420, as well as revealing resistance at 1440. It would seem that a break of either price point will not be easy to achieve ahead of the US Non-Farm Payroll release on Friday.

Silver bullion trade looks to be the more bullish of the precious metal markets, and is easily playing catch-up with historical prices, that still seem to have more valuation room to run in regard to silver’s value compared with gold. Recent SMI alerts have completed on the long side of silver, and now will be a time to watch for consolidation, and to buy the dip rather than look to buy the new break-out.

West Texas Intermediate, the most liquid of global oil markets, has managed to easily hold above 101.00, after completing the SMI alerts on Monday that broke 100.30 and targeted 101.60. The bullish read on trend and momentum will now require a drop down to test support, which will instigate another long signal. The short side of oil trade creating a sustainable signal looks to be a long way off, and would not be confirmed until a weekly close below 98.00 is seen.

In general, now is the time to be patient and allow the commodity markets to consolidate recent gains, possibly test recent support areas, and to then look to re-position. Now is probably not the time to be buying commodity markets at what are now very extended levels.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.