Gold and crude surge after Fed chief’s remark on continuing QE


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  • Monday, 15 Jul 2013

LAST week Federal Reserve chairman Ben Bernanke rallied the market by hinting that the quantitative easing (QE) would likely be continued.

Despite widespread debates and rumours of tapering financial stimulus, gold and crude soared due to weakening dollar. Meanwhile tension is still high in Egypt with criminal investigation launched against ousted president Mohamed Morsi, whose loyalists staged mass demonstrations in Cairo and blocked major roads.

Gold prices rallied to almost 1,299.00 tops last week amid weakening greenback that came after Bernanke’s remarks. This week, we foresee a pullback to 1,250.00—1260.00 regions before new momentum kicks in. Breaking above the 1,300.00 regions may aim for 1,340.00 regions. Stay alert for fundamental news as this will direct yellow metal into new direction. Abandon your long-view if the market drops below 1,250.00 as it may trigger new bearish sentiment.

Silver prices rallied and momentarily reclaimed the territory above 20.000 resistances before closing at 19.890 levels on Friday. Similar to gold, we reckon that silver is currently neutral and can go either way. Staying too long below 20.000 benchmarks could be bearish enough to re-test 18.50 areas. Pay attention to the dollar index this week as continuous weakening will trigger higher prices in silver. Crossing above 20.000 levels will aim for 22.000 targets.

WTI Crude prices soared to 107.44 levels and made 16-month high amid accelerated stockpile depletion at 9.9 million barrels last week.

The market was subsequently showing sign of exhaustion and may fizzle out this week into technical consolidation.

We reckon the trend to trade from 104.00 to 108.00 regions while prone to slight bearish bias.

However, take note that Egypt’s unrest and disruption on Libyan oil production could propel WTI Crude prices to test higher target at 10.00 regions.

Crude Palm Oil Futures (FCPO) on Bursa Derivatives closed lower on Friday after demands fell. The September delivery month closed at 2,300 amid general price declines across agricultural boards.

The plunge may continue in coming week due to rising volume and opening interest on Friday’s sentiment.

Technically, we foresee the trend to be pressured by selling interest at 2,370 while the downside could dive further to 2,230 as first target.

 

>Disclaimer: This article is written for general information only. No liability by the contributors or newspaper.

>Dar Wong and Wahyu PY are the research team of PWFOREX.com. You may reach them through www.pwforex.com.

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