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Published On: Sun, Sep 1st, 2013

Gold, Silver and Oil Markets Overview

Gold

Gold has been under heavy speculation this week. Recent data (new home sales, consumer confidence, durable goods) from the US shows that the recovery is slowing down. Gold prices have increased to $1400 on this data. Sound economic data is still needed by the Fed to decide when to start tapering QE. The timing and quantity of taper is causing uncertainty for investors. However, when tapering is in effect we should see the USD increase and thus investors will jump from the precious metal back to the green back.

It’s difficult to believe but the civil unrest in Syria is causing gold prices to rise. This has been largely due to speculation on whether the US will engage in military action with Syria. This political situation has been causing uncertainty for the greenback and investors are looking to invest in the safe haven again (gold).

Even though the Asian markets have been hit left, right and centre by QE tapering fears, this has not stopped consumers in these countries from buying gold. The cheap price of gold has been taken advantage of by consumers in China and India and is the reason why gold has found support at $1200 level. This has also helped push up the price of gold recently to a 2 month high. It is this physical demand that is keeping gold at current levels that we are seeing.

Red and Green levels indicate resistance and support levels:

Support 2 (S2)

Support 1 (S1)

Current Price

Resistance 1 (R1)

Resistance 2 (R2)

1314.43

1356.80

1411.12

1414.20

1478.43

XAU.USD (Chart 1)

Silver

This precious metal has not been in the limelight recently but is yet to emerge.  Recently India, the world’s largest consumer of gold, has increased limitations on the amount of gold it imports. Some of these measures include increased import tax, which will be passed on to the consumer. In addition, they have banned medallions and coins made from gold and consumers are therefore switching from gold to silver in India as it is cheaper and there are fewer restrictions involved.

Silver’s physical demand has increased over the year and it is likely to continue as long as there is uncertainty in the timing and quantity of tapering in the US. India is unlikely to lift current restrictions on gold imports.

Support 2 (S2)

Support 1 (S1)

Current Price

Resistance 1 (R1)

Resistance 2 (R2)

21.569

22.754

24.259

24.508

26.310

XAGUSD (Chart 2)

Oil

Just like gold, crude oil has also been under heavy speculation. This has been due to the civil unrest in Syria. Tensions have increased after Syrian President Bashar al-Assad launched a chemical attack against rebels in Syria. This has sparked a large row between the US and Syria there is the possibility that the US may take military action against Syria. This has the potential to hurt oil supplies and may push prices higher. Investors feel that Syrian civil war could cause a domino effect on neighbouring countries and this may cause oil prices to increase further. Recently Libya has opened its port at Marsa al Brega and this could stabilise markets as we should see current demand meet supply.

Recent sound economic data that has come from the Eurozone and China should help the short term outlook for the fuel. This could increase the demand from both consumers and manufactures in the Eurozone and China as confidence increases for both consumers and businesses. On a side note, if the US economy keeps growing, the price of crude oil may continue to keep rising. Consumer confidence is likely to increase and thus will have an effect on consumption of the fuel.

Just like gold, the disappointing data on US new home sales supported the fuel. The uncertainty of tapering is helping the fuel as it denominated in USD and a weaker USD will increase the value of the fuel.

Support 2 (S2)

Support 1 (S1)

Current Price

Resistance 1 (R1)

Resistance 2 (R2)

106.44

109.13

111.89

112.56

115.95

Crude Oil (Chart 3)

 

CFDs, spreadbetting and FX can result in losses exceeding your initial deposit. They are not suitable for everyone, so please ensure you understand the risks. Seek independent financial advice if necessary. Nothing in this article should be considered a personal recommendation. It does not account for your personal circumstances or appetite for risk.

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- Article contributed by Accendo Markets - an online trading services provider, offering CFDs, spread betting and forex to retail (private) clients.

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