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Patience Needed For Commodity Traders

Global commodity markets are holding lower, after price action moves this week saw profit-taking of recent gains, that had paid strong dividends over the course of 2011 in the precious metal and oil markets. Banking of profits should not be confused with the building of long-term short positions, as recent moves are not as yet providing any signals to indicate that a new short mid-term trend will be sustainable.

Patience is key at times when global markets reverse off tests of yearly highs, and attention should be paid to the strength of trend on the longer-term timeframe charts. Recent moves to test support are likely to be bought in the near-term on precious metals and oil trade.

The Sentiment and Momentum Indicator alert to get short the gold bullion market, with a break of 1422 eventually hit its downside target at 1411, and that position should now be closed. Price action will be closely monitored to see whether this test of support is going to now be bought, in a replication of recent buy-the-dip patterns of trade. The 20-day simple moving average is at the 1410 area on gold bullion trade, and that will be a pivotal point to work from during the course of next week.

Silver bullion traders continued the profit-taking pattern that has been seen in the gold market, with a move to test 34.00 support, which was highlighted as a highly likely move in this week's client note updates. There was no short signal issued from the recent moves lower in silver, as the bullish trend and sentiment reads are far too strong to want to get on the short side of a silver market that looks to have plenty of traders willing to buy-the-dips. The real test of resolve will be a move lower towards 33.50, which will reveal the strength of support at the 20-day simple moving average. Traders not already in a long-term silver position may want to wait to see the impact of global commodity trade at the beginning of next week.

West Texas intermediate oil trade has given up some of the recent gains, and dropped below the pivotal psychological $100 a barrel area, that looks to be where fair value has been found. If global markets do make a move towards 97.00 support, which is the 20-day simple moving average, those not already in a long-term oil position will be able to gauge the strength of support of speculative interest. Now is not the time to be looking for new oil positions, not until the initial momentum is evaluated from the early part of next week's trade.