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  • Black Clouds Do Not Impeded Precious Metal Trade 2 comments
    Feb 10, 2011 9:04 AM
    Gold bullion trade is back into the price range set on 21st January, trading around the 1350 area with sporadic price action that is unable to set an easy path to follow. The 100-day simple moving average at 1364 is creating upside resistance, with 1347 and the 20-day simple moving average forming an area of support below. A new sell signal, albeit into a very strong long trend, is being formed with a break below 1345 drawing in a test of 1330.

    Any positions taken on the short side of gold could possibly be banked early, as traders will have seen a propensity for the market to buy-the-dip on any tests of gold bullion hitting support. A break above 1370 draws in 1395, and possibly a retest of the 1430 area, however a long signal has not yet been formed.

    Recent trade in the silver market has seen a test of 30.60 resistance fail to hold higher, with silver now trading just below the 30.00 price point area. A new sell signal is forming, and although into a long trend, it does seem as though a break below 29.50 could draw in a test of 28.90, which houses the 50-day simple moving average. Silver is trading in a similar fashion to gold bullion, with dips being bought, and tests of recent high areas drawing in solid buying interest when they reverse. Silver looks to be the more bullish of the two precious metals, and more inclined to make a long break through yearly highs that would test 31.20 resistance.

    It was noted in recent client notes that trade in West Texas intermediate, the most liquid of all global oil contracts, was being driven by synthetic inflationary pressures, rather than global demand and expansion. The recent civil unrest within the Middle Eastern area allowed oil traders to push WTI up to test 93.00 resistance, but those moves have filed to hold and oil is now trading at the 100-day simple moving average support area around 86.20. The sell signal from 90.50 has now completed, and traders will be waiting for the three-day period of consolidation to show a sign that price action is able to break, one way or the other.

    In general, global commodity markets have diverged from currency trade on an intra-day basis. While black clouds continue to hang over issues surrounding civil unrest across Asia, the Middle East and Europe, trade will be volatile but likely to hold on the long side of things.
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  • doubleguns
    , contributor
    Comments (9693) | Send Message
    "It was noted in recent client notes that trade in West Texas intermediate, the most liquid of all global oil contracts, was being driven by synthetic inflationary pressures, rather than global demand and expansion."


    This inflation seems real to me not synthetic or did I miss something in the meaning.
    10 Feb 2011, 10:56 AM Reply Like
  • The LFB
    , contributor
    Comments (73) | Send Message
    Author’s reply » The inflation is certainly real, it is being seen in limit-up soft commodity trading floors globally, and in volatile adjustments in precious metals every day as a hedge against Fed manipulation. The point raised was that oil, as well as most other commodity markets, are currently viewed as investment asset classes more than supply and demand driven markets.


    The danger in synthetic inflation is that higher interest rates are a natural response, which cannot be easily sustained by economies that are not expanding at the same rate of inflation. Danger of double recessionary dips then prevails, and asset bubbles (read equity markets especially) can more easily pop. Synthetic inflation, although real as determined by higher commodity prices, is hard to tame once unleashed.
    11 Feb 2011, 02:34 AM Reply Like
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