MRG MEGA BERJANGKA
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Silver Posts Biggest Loss Since January As US Dollar Gains

Posted By : MRG Mega Berjangka, Feb 27, 2014 – 09:38

Talking Points

Precious Metals Turn Lower On Greenback Strength
Crude Inventories Fall Further Pushing WTI Higher
Risk Trends to Offer Further Bearings for Commodities

Silver plunged below key support around 21.50 overnight as the precious metals space suffered alongside gains in the US Dollar. Meanwhile, crude oil found some buying support on the back of a bullish inventories report from the Department of Energy. Looking ahead, the commodities space is likely to take cues from upcoming Fed Speak and US economic data via their implications for broader risk trends.

Precious Metals Turn Lower On Greenback Strength

Silver posted its biggest loss in almost a month as US Dollar strength weighed on precious metals including gold (use the Day Change indicator to easily see historical percentage changes). The strength in the greenback was witnessed alongside weakness in risk assets, suggesting some risk-aversion may have benefited the reserve currency. A better-than-anticipated reading from US New Home Sales figures failed to leave a lasting impact on the direction of risk sentiment as the SPX 500 erased gains towards the end of the session.

Crude Inventories Fall Further Pushing WTI Higher

Crude oil extended an early advance following the release of the DOE’s Weekly Petroleum Status Report that revealed the fourth straight drawdown for crude inventories. Newswires have suggested the fall in inventory levels is partly attributable to increased demand as the newly-completed second-leg of the Keystone XL pipeline delivers oil to the Gulf Coast.

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Risk Trends to Offer Further Bearings for Commodities

Risk appetite remains vulnerable as we probe the record highs for the SPX 500 (a benchmark for risk trends). The bulls resolve may be tested in the session ahead with several noteworthy pieces of event risk on the calendar. This includes German unemployment and CPI data, as well as testimony from Fed Chair Janet Yellen and US Durable Goods Orders. A souring of investor sentiment on pro-‘taper’ talk from Yellen or disappointing economic data would likely drive demand for the US Dollar as a safe-haven and may weigh on precious metals as well asgrowth-sensitive commodities like oil and copper.

CRUDE OIL TECHNICAL ANALYSIS – The 61.8% Fib Retracement level from the September High at $103.30 has acted to cap oil’s advance for the time-being. A Hanging Man candle formation on the daily is hinting at a reversal, however, a shift to a downtrend would be required before offering a bearish technical bias. Fading momentum signaled by the rate of change indicator suggests that such a shift is drawing closer.

Silver_Posts_Biggest_Loss_Since_January_As_US_Dollar_Gains_body_Picture_6.png, Silver Posts Biggest Loss Since January As US Dollar Gains

Daily Chart - Created Using FXCM Marketscope 2.0

NATURAL GAS TECHNICAL ANALYSIS – The plunge in natural gas prices has led to a spike in volatility for the commodity. A more convincing break below nearby buying support on the daily at 4.550 may open up the 4.210 level.

Silver_Posts_Biggest_Loss_Since_January_As_US_Dollar_Gains_body_Picture_7.png, Silver Posts Biggest Loss Since January As US Dollar Gains

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD TECHNICAL ANALYSIS – After teasing at an upside break gold has failed to hold above $1,336 (61.8% Fib Retracement Level). An uptrend on the daily supports further gains for the commodity and any declines are likely to be met by support at the $1,306 mark.

Silver_Posts_Biggest_Loss_Since_January_As_US_Dollar_Gains_body_Picture_8.png, Silver Posts Biggest Loss Since January As US Dollar Gains

Daily Chart - Created Using FXCM Marketscope 2.0

SILVER TECHNICAL ANALYSIS – The silver bulls appear to have lost the battle to hold onto gains for the precious metal around the 22.00 level. The decline in yesterday’s trading was the biggest percentage loss since January (use the Day Change indicator pictured below to easily see historical percentage changes). This follows a signal from the rate of change indicator indicating a fading of upside momentum. While we’ve broken below support around 21.50, a shift towards a downtrend is required before offering a bearish bias for the commodity.

Silver_Posts_Biggest_Loss_Since_January_As_US_Dollar_Gains_body_Picture_9.png, Silver Posts Biggest Loss Since January As US Dollar Gains

Daily Chart - Created Using FXCM Marketscope 2.0

COPPER TECHNICAL ANALYSIS– Copper is heading towards support at $3.175 following a break through the 23.6% Fib Level at 3.235. With a shift in the trend indicated by prices moving below their 20 SMA a bearish technical bias is offered.