Gold Rally Triggers Buy Stops as Crude Oil Leads Commodities Surge

The price of gold eased back from its strongest Dollar and Euro prices in nearly three weeks in London on Tuesday, holding above a one month high of £700 per ounce for UK investors as European shares and US stock futures held flat. The CRB commodities index rose almost 2% as sugar neared a three decade high and US crude oil contracts touched $82 per barrel, more than twice the price of 12 months ago. Consumer price inflation in the 16 nation Eurozone leapt in Dec. to a 10 month high, the Eurostat agency said Tuesday morning, unwinding the last of 2009's second half deflation.

"Buy stops were triggered" as gold rose late in Asia says a Hong Kong dealer today, with professional traders re entering the gold market after last month's 12% drop. "The Dollar remains the key driver," says an analyst's note. "All commodities have benefited from an increase in risk appetite." But "Buying interest in the physical market seems to have faded on gold's [1.8%] rally yesterday," says Standard Bank's daily commodity briefing. "We need to see much more Dollar weakness on a trade weighted basis to sustain a rally in gold." (Is gold's 10 year run all about the Dollar? Read Dollar Nonsense here...)

Monday saw the 1128 tonne SPDR Gold trust shed five tonnes of the gold backing its exchange traded shares, the first such drop in almost a month but only equal to the annual 0.4% expense ratio it charges stock holders. Long dated government bonds fell Tuesday morning, pushing 30 year US Treasury yields up to 4.75% ahead of Pending US Home Sales data and Vehicle Sales figures for Dec.....Read the entire article.

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The Market Oracle: Betting on Commodities, Especially Crude Oil

In 2008, prices of oil, natural gas, gold, silver, copper, corn, wheat, and most other commodities reached multi-year, and in some cases multi-decade, highs. They’ve fallen sharply since then, but commodities aren’t going out of business. Another peak is coming, and it will be far higher, especially for oil. The price run up to 2008 came as a debt induced economic acceleration in the developed countries sucked in imports from the emerging economies of Asia. Virtually all the world was gobbling up commodities, but supplies were still choked by the preceding decades of underinvestment in mine development, processing plants, pipelines, railroads, and other elements of the industrial infrastructure needed for producing and transporting raw materials.

Faster consumption and static production capacity had an unsurprising effect prices rose. Then they rose some more and kept on rising. And in the later stages of the commodity price boom, investors, especially hedge funds, joined the bidding as a way to bet on a growing world economy. More bidders, more price push. But not forever. When the credit bubble that had been overstimulating just about every industry became unsustainable and financial markets everywhere collapsed, commodity prices collapsed along with them in anticipation.....read the entire article

Gold and Crude Oil Market Meltdown Analysis with the Market Oracle

Everything is playing out exactly as we hoped and expected this week. We have been so close to a buy signal in gold and silver but Monday’s intraday observations saved us from a nasty trade. Those of you in love with oil just had a Kiss Good Bye! Better PUT some love letters together J pardon the pun. Natural Gas is all bottled up. Can you smell that?.....Complete Story



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Waiting for Crude Oil to Reverse to the Downside

My optimal pullback target zone for the PowerShare DB Double Short Oil ETN (NYSE: DTO) is 82.00-79.00, which has been met today. However, so far the inability of the DTO to turn up with sustainability and leave little doubt that the correction off of the 7/13 high at 99.50 is complete is bothersome, and suggests perhaps that more corrective weakness is forthcoming ahead of my anticipation of a powerful upside pivot reversal.
Let’s notice that there is an unfilled gap from July 2 between 77.70 and 76.15 which might have to be satisfied.....Complete Story

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Crude Oil Price Collapse Portends of Larger Monumental Rise

There is little known or written about the reason why crude oil was required to undergo a monumental collapse similar to a huge dive. This monumental collapse portends an even bigger and more monumental rise. In jest i would like to call this reason “the rule of rosen.” However, i know better than to usurp in any way those forces that are far more powerful than any mortal or collection of mortals.....Complete Story

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Renewed Pressure Forthcoming for Crude Oil

From Mike Paulenoff at The Market Oracle....

My pattern work in nearby crude oil argues for more weakness after this little bounce off of the $58.00 area (into the $62.50-$63.00 area max). If weakness resumes as anticipated, then oil should head for new reaction lows in the $55-$53 target zone to complete the first down leg in the aftermath of the recovery rally from the January low at $32.70 to the June high at $73.23. Let’s notice that both the weekly momentum (relative strength) and weekly stochastics.....Complete Story