PGMs lead the rally in the precious metal complex as global economic recovery spurred optimism on demands. Moreover, Susquehanna Capital Group's purchase of ETF Securities' US platinum and palladium ETFs also boosted prices. Platinum for April delivery extends gain to 1533, the highest level since August 208, in European morning after surging +3.6% Monday. Palladium for March delivery advances to an 18-month high at 427. The benchmark contract gained +3.1% Monday.
ETF Securities said that Susquehanna Capital Group, also the lead market maker bought 100K shares of its first US platinum exchange-traded fund on December 30 and delivery is expected to take place on January 8. At the same time, the Group also purchased 100K shares of the US palladium ETF. In April the London-based ETF Securities filed papers to bring the first platinum and palladium ETFs to the US. On December 22, the SEC approved a proposed change in rules to list and trade shares of these trusts.
According to ETF Securities, investments in platinum ETF increased +155% yoy to 434 869 oz in 2009. Investment demand has played an important role in pushing platinum price upward in 2009 (+56%). Growth in palladium investment was even stronger. Palladium holdings in ETF Securities jumped +293% in 2009. Johnson Matthey said that approval of the new ETFs will general additional demand of 200K oz for both platinum and palladium.
In the physical market, demand for platinum is expected to have dropped -4.4% in 2009 due to global economic recession. In 2010, recovery in the auto sector should boost demand for platinum as well as other PGMs. While China will continue to be the growth driver, recovery in fleet purchases and the new light duty vehicles after the introduction of the first stage of Euro V emissions legislation should also lift demand.
The platinum sector may return to supply/demand shortage in 2010 (as in 2007 and 2008) as demand for autos improve but mine productions in South Africa may continue to face problems such as power outage, strikes and safety issues. These are potential causes to production disruption.
Gold price remains strong after a +2% rise Monday as driven by rallies in PGMs and decline in USD. Elizabeth Duke, a Fed Governor, said that moderate economic growth in likely to keep interest rates low for an extended period. This damped speculations that policymakers will raise the Fed funds rate by June.
Crude oil price falters below 2009-high at 82 although the momentum remains strong. The market's focus is on US factory orders and pending home sales for November. Both data are expected to be worse than the prior month. After US close, the industry-sponsored API will report its estimates on oil inventories
ETF Securities said that Susquehanna Capital Group, also the lead market maker bought 100K shares of its first US platinum exchange-traded fund on December 30 and delivery is expected to take place on January 8. At the same time, the Group also purchased 100K shares of the US palladium ETF. In April the London-based ETF Securities filed papers to bring the first platinum and palladium ETFs to the US. On December 22, the SEC approved a proposed change in rules to list and trade shares of these trusts.
According to ETF Securities, investments in platinum ETF increased +155% yoy to 434 869 oz in 2009. Investment demand has played an important role in pushing platinum price upward in 2009 (+56%). Growth in palladium investment was even stronger. Palladium holdings in ETF Securities jumped +293% in 2009. Johnson Matthey said that approval of the new ETFs will general additional demand of 200K oz for both platinum and palladium.
In the physical market, demand for platinum is expected to have dropped -4.4% in 2009 due to global economic recession. In 2010, recovery in the auto sector should boost demand for platinum as well as other PGMs. While China will continue to be the growth driver, recovery in fleet purchases and the new light duty vehicles after the introduction of the first stage of Euro V emissions legislation should also lift demand.
The platinum sector may return to supply/demand shortage in 2010 (as in 2007 and 2008) as demand for autos improve but mine productions in South Africa may continue to face problems such as power outage, strikes and safety issues. These are potential causes to production disruption.
Gold price remains strong after a +2% rise Monday as driven by rallies in PGMs and decline in USD. Elizabeth Duke, a Fed Governor, said that moderate economic growth in likely to keep interest rates low for an extended period. This damped speculations that policymakers will raise the Fed funds rate by June.
Crude oil price falters below 2009-high at 82 although the momentum remains strong. The market's focus is on US factory orders and pending home sales for November. Both data are expected to be worse than the prior month. After US close, the industry-sponsored API will report its estimates on oil inventories
SILVER REPORT :
Silver's sideway consolidations is still in progress and at this point, intraday bias remains neutral ANother rise cannot be ruled out but after all, we'd expect upside to be limited by 61.8% retracement of 19.50 to 16.78 at 18.46 and bring fall resumption. Firm break of 16.78 will target 16.12 support next.
In the bigger picture, rise from 12.435 should have completed at 19.50 on bearish divergence condition in daily MACD, after just missing 19.55/21.55 resistance zone. Break of 16.12 support will confirm this case and should target lower trend line support at 13.88 level. This will also be the another signal that whole medium term rise from 8.4 has finished too. Sustained break of the lower trend line support will confirm this medium term bearish case and bring further fall towards 8.4 low.
Also, note that whole medium term rise from 8.4 is is treated as part of the long term, wide range, consolidation pattern that started at 21.44 back in Mar 08. Hence, even in case of another rise, upside is expected to be limited inside this 19.55/21.44 resistance zone and bring another medium term fall.
In the longer term picture, the up trend from 01 low of 4.01 topped out at 21.44 and subsequent price actions are treated as correction/consolidation to this up trend. Fall from 21.44 completed after drawing support form 8.5 key level. However, subsequent rally from 8.4 is not displaying a clear impulsive structure and hence, we'd prefer the case that it's just the second wave of the wide range consolidation pattern. Another medium term fall should still be seen for retesting 8.5 before completing the consolidation. Nevertheless, strong support is still expected at 5.45/8.5 support zone to conclude the consolidation.
GOLD REPORT:
Gold's break of 1114.5 minor resistance suggests that rise from 1075.2 is resuming and flips intraday bias back to the upside for 1142.9 resistance. Break there will indicate that whole fall from 1227.5 might have completed and will bring stronger rally to retest this resistance. On the downside, though, below 1093.5 minor support will indicate that consolidations from 1075.2 might have completed and will bring fall resumption to 1075.2 support and below.
In the bigger picture, rise from 681 is expected to develop into a set of five wave sequence with first wave completed at 1007.7, second wave triangle consolidation completed at 931.3. Rise from 931.3 is treated as the third wave and has possibly completed at 1227.5 after missing 100% projection of 681 to 1007.7 from 931.3 at 1258. Deeper pull back could now be seen to 1026.9/1072 support zone, or even further to retest 1000 psychological level. But downside should be contained well above 931.3 support and bring up trend resumption to another high above 1227.5.
In the long term picture, rise form 681 is treated as resumption of the long term up trend from 1999 low of 253 after interim consolidation from 1033.9 has completed in form of an expanding triangle. Next long term target is 100% projection of 253 to 1033.9 from 681 at 1460 level. We'll hold on to the bullish view as long as 931.3 structural support holds.
OIL REPORT:
WTI crude oil extends the 8th day of rally above 80 on speculations for growth in energy demand as US weather remains below-normal. The February contract surged to as high as 81.16, the highest level since October 26, in European session. While macro-economic outlook and equity market performance will continue to play a role in driving crude oil price, a stronger emphasis will be placed on fundamentals this year than in 2009.
Crude oil price advanced +78% in 2009. However, US oil inventory reached the highest level in almost 2 decade. Look at timespreads, the steep contangoes also suggest severe oversupply in the market. At the same time, the correlation between oil price and stock market rose to 45% in 2009, almost doubling that in the prior year. These evidenced that the strong performance of crude oil last year was driven by macroeconomic outlook and market anticipation of better fundamentals in the future.
As we enter 2010, investors should focus on demand growth. Again, it's widely expected that China will remain the locomotive for growth. According to the US Energy Department, crude oil demand should rise +1.1M bpd to 85.219M bpd in 2010. Of the 1.1M bpd increase in demand, 0.405M bpd will come from China while only 0.09M bpd from OECD economies.
In 2009, the inverse correlation between USD and crude was prominent. However, this pattern may fade this year. The impact of the dollar's movement on crude oil depends on its cause. For instance, if USD rises as the US economy improves rapidly and outpaces other countries. This would benefit commodities.
Gold price rebounds strongly to 1118 in European session. Having traded below 1100 for most of the time in the last 2 weeks, the yellow metal appears 'cheap' to buyers. Unlike crude oil, we expect strength in USD will continue to pressure gold. In fact, the pile-up of huge short USD/long gold positions in 2009 remains an overhang on gold's outlook.
Silver's sideway consolidations is still in progress and at this point, intraday bias remains neutral ANother rise cannot be ruled out but after all, we'd expect upside to be limited by 61.8% retracement of 19.50 to 16.78 at 18.46 and bring fall resumption. Firm break of 16.78 will target 16.12 support next.
In the bigger picture, rise from 12.435 should have completed at 19.50 on bearish divergence condition in daily MACD, after just missing 19.55/21.55 resistance zone. Break of 16.12 support will confirm this case and should target lower trend line support at 13.88 level. This will also be the another signal that whole medium term rise from 8.4 has finished too. Sustained break of the lower trend line support will confirm this medium term bearish case and bring further fall towards 8.4 low.
Also, note that whole medium term rise from 8.4 is is treated as part of the long term, wide range, consolidation pattern that started at 21.44 back in Mar 08. Hence, even in case of another rise, upside is expected to be limited inside this 19.55/21.44 resistance zone and bring another medium term fall.
In the longer term picture, the up trend from 01 low of 4.01 topped out at 21.44 and subsequent price actions are treated as correction/consolidation to this up trend. Fall from 21.44 completed after drawing support form 8.5 key level. However, subsequent rally from 8.4 is not displaying a clear impulsive structure and hence, we'd prefer the case that it's just the second wave of the wide range consolidation pattern. Another medium term fall should still be seen for retesting 8.5 before completing the consolidation. Nevertheless, strong support is still expected at 5.45/8.5 support zone to conclude the consolidation.
GOLD REPORT:
Gold's break of 1114.5 minor resistance suggests that rise from 1075.2 is resuming and flips intraday bias back to the upside for 1142.9 resistance. Break there will indicate that whole fall from 1227.5 might have completed and will bring stronger rally to retest this resistance. On the downside, though, below 1093.5 minor support will indicate that consolidations from 1075.2 might have completed and will bring fall resumption to 1075.2 support and below.
In the bigger picture, rise from 681 is expected to develop into a set of five wave sequence with first wave completed at 1007.7, second wave triangle consolidation completed at 931.3. Rise from 931.3 is treated as the third wave and has possibly completed at 1227.5 after missing 100% projection of 681 to 1007.7 from 931.3 at 1258. Deeper pull back could now be seen to 1026.9/1072 support zone, or even further to retest 1000 psychological level. But downside should be contained well above 931.3 support and bring up trend resumption to another high above 1227.5.
In the long term picture, rise form 681 is treated as resumption of the long term up trend from 1999 low of 253 after interim consolidation from 1033.9 has completed in form of an expanding triangle. Next long term target is 100% projection of 253 to 1033.9 from 681 at 1460 level. We'll hold on to the bullish view as long as 931.3 structural support holds.
OIL REPORT:
WTI crude oil extends the 8th day of rally above 80 on speculations for growth in energy demand as US weather remains below-normal. The February contract surged to as high as 81.16, the highest level since October 26, in European session. While macro-economic outlook and equity market performance will continue to play a role in driving crude oil price, a stronger emphasis will be placed on fundamentals this year than in 2009.
Crude oil price advanced +78% in 2009. However, US oil inventory reached the highest level in almost 2 decade. Look at timespreads, the steep contangoes also suggest severe oversupply in the market. At the same time, the correlation between oil price and stock market rose to 45% in 2009, almost doubling that in the prior year. These evidenced that the strong performance of crude oil last year was driven by macroeconomic outlook and market anticipation of better fundamentals in the future.
As we enter 2010, investors should focus on demand growth. Again, it's widely expected that China will remain the locomotive for growth. According to the US Energy Department, crude oil demand should rise +1.1M bpd to 85.219M bpd in 2010. Of the 1.1M bpd increase in demand, 0.405M bpd will come from China while only 0.09M bpd from OECD economies.
In 2009, the inverse correlation between USD and crude was prominent. However, this pattern may fade this year. The impact of the dollar's movement on crude oil depends on its cause. For instance, if USD rises as the US economy improves rapidly and outpaces other countries. This would benefit commodities.
Gold price rebounds strongly to 1118 in European session. Having traded below 1100 for most of the time in the last 2 weeks, the yellow metal appears 'cheap' to buyers. Unlike crude oil, we expect strength in USD will continue to pressure gold. In fact, the pile-up of huge short USD/long gold positions in 2009 remains an overhang on gold's outlook.
