Commodities Report: Gold Prices Consolidating, WTI Trades Higher
Keagan York | Jul 15, 2013 03:25AM ET
prices have consolidated last week after having tested support at $1,180. The metal opens the week at $1,285. We had suggested that gold would find support at around the $1,180 level as this is approximately the average cost of production per ounce for the metal. This is not to say that gold prices cannot fall further. In all likelihood there will be further weakness. However, we are heartened to see prices consolidate last week. We await a breach of resistance around the $1,320 level before evaluating our stance. Currently, although we remain bullish gold in the medium to long term, we are sidelined. We expect further gains in the gold price as it becomes apparent that the Federal Reserve may not taper stimulus as quickly as many have expected. Look for an imminent breach of $1,300.
Compass Direction
Short-Term Medium-Term
NEUTRAL NEUTRAL
US Oil (WTI) continues to trade higher, defying our expectations, as it gained more than 1% to above $106.00 on mounting speculation that inventories will continue
to fall. WTI inventories over the past fortnight have recorded their biggest fall in over 30 years. The Energy Information Administration reported a fall in inventories of 20.2 million barrels in the week ending July 5 which spurred a 2.6% rally in WTI last. The Brent-WTI spread continues to contract and
it is now trading below $3.00 after having traded well above $25.00 in the recent past.
We had crystallised loses on our short positions as WTI broke above $98.00 and have since been sidelined. We still believe that prices will fall far from current levels in the medium and are simply monitoring the markets for a suitable entry point.
Compass Direction
Short-Term Medium-Term
BEARISH BEARISH
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