Commodity Update: Gold Closes Near 5 Month High

finished about in the middle of the $4 trading range experienced this past week. After challenging the trend line, the last 2 days bulls are trying to make a case for a bounce but I am still looking for a trade under $90 in the coming weeks. RBOB finished the week strong with a 2.3% jump Friday lifting prices back just under $3/gallon in October. $2.70 remains my target in the coming weeks. Heating oil bounced off its 8 day MA to close at four month highs just under $3.20. $2.90 remains my target and I do not see the products or Crude able to hold onto these gains this week. Natural gas is nearly 8% off levels seen mid-week as prices are trading back above their 18 day MA. Prices will likely bounce from here lifting October close to $3 in my opinion.

Stock Indices: Stocks traded lower for the second week in a row but as of this post, prices were able to hold key pivot levels, above 1400 in the S&P and 1300 in the Dow. All things considered, it's impressive stocks were able to hold near their highs but my stance remains a correction is upon us. My targets are 1350 and 12700 in the coming weeks.

Metals: Gold managed to pick up 2.25% to close out the week just under $1700/ounce near five month highs. The 200 day MA supported all week and acted as a launching pad Friday. I would still not rule out a trade near $1635 before we see much higher prices. Silver ended the week on a surge 4.4% higher with prices completing a 50% Fibonacci retracement at their highs. The 200 day MA supported this metal as well. $30.50 is support while upside should be capped at $33 in the short run.

Softs: Cocoa jumped nearly 10% last week far exceeding my expectations but I think the easy money has been made on longs. As long as October sugar hovers around the 20 cent level it can be accumulated as I expect a bounce in the coming weeks. The June lows will need to hold for me to remain long. Cotton gained for the third consecutive session and though I don’t expect much upside, the 100 day MA in December will serve as the pivot point; at 75.25. Coffee ended the week about where it started, near its August lows. There is no need to trade coffee until we get a bounce which I would look to sell.

Treasuries: 30-yr bonds have advanced 4% in the last two weeks completing 61.8% Fibonacci retracement as of Friday. Probing shorts is back on my radar if we see more upside into this week. On a percentage basis 10-yr notes have only moved about half as much but they too completed a 61.8% retracement, lifting September near 135’00. Same advice: I may explore shorts next week. Stay tuned.

Livestock: Live cattle should continue to grind higher, use the 20 day MA as support with an upside target of $127.00. Feeder cattle closed near their highs on the week and should see further appreciation to come as well. If September can take out $147.00 do not rule out $150.00. After two painful weeks lean hogs were able to squeeze out a small victory, gaining slightly. I feel a bounce could play out in the coming weeks. I'm thinking October can get back near 77.00.

Grains: $8/bushel continues to serve as magnet to prices in December corn. Establish bearish trades with stops just above the highs of this past week at the 9 and 20 day MAs and look to add to the trade on a breakdown. $7/7.10 remains my target. In my opinion, soybeans have the most explosive potential in AGs so wait for signs of a top before gaining bearish exposure. A close under $17 in November would be a great start, current price is $17.56. Wheat ended the week back under $9/bushel which appears to be the pivot point in the December contract. As long as prices remain under $9.20 you can trade from the short side in my opinion. My target is $8.30.

Currencies: The dollar index lost 0.60% to trade at 3 ½ month lows filling a gap in the chart from mid-May. If prices can hold 81.00 into this week I’d expect a bounce from here. The yen can be bought with stops under the 20 day MA, about $750 of risk per contract. Fade a rally in the Aussie that approaches 1.0450.

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