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Jim Wyckoff's Morning Report: Strong Demand for Gold in Asia

17 April 2013
Jim Wyckoff Commentary -  TheCropSite

GLOBAL - The world market place continues to calm down and focus more on individual markets’ supply and demand fundamentals, instead of the world geopolitical scene.

European stock markets were lower Wednesday, on more dour economic news coming out of the European Union. Asian stock markets were firmer as focus moved back toward the regional matters in Asia.

On tap in the US Wednesday is the Federal Reserve’s beige book, which will be closely scrutinized by traders and investors, given recent machinations by Fed officials regarding the central bank’s quantitative easing policies and how long to keep them in place.

There were more reports overnight of strong demand for physical gold coming out of the Asian region, and especially India. Many market watchers are commenting this week that the holders of “paper gold” (ETFs and futures contracts) have been queued up as major sellers, while the actual holders of physical gold have been lined up as big buyers on the dip.

The World Gold Council said Wednesday the overall fundamental picture in gold has not changed, despite the recent downdraft in prices. As a 30-year market reporter, trader and analyst, I have seen many extreme price moves in many markets.

This recent big sell off in gold is certainly extraordinary. However, nearly all markets traded have extraordinary moments and extreme price moves. But when the dust settles those markets return to normal trading conditions. And the trader/investor attitudes toward those markets do not change.

Such is likely to be the case in the gold and silver markets. US economic data due for release Wednesday includes the weekly MBA mortgage applications survey, the weekly DOE energy stocks report, and the Federal Reserve’s beige book. -Jim

US Dollar Index

The US dollar index is solidly higher in early US trading, on a good bounce from Tuesday’s losses. The index has turned choppy recently as the bulls have faded a bit.

Slow stochastics for the dollar index are bearish early today. The dollar index finds shorter-term technical resistance at 82.500 and then at this week’s high of 82.620. Shorter-term support is seen at 82.000 and then at this week’s low of 81.780. Wyckoff's Intra Day Market Rating: 6.0

NYMEX Crude Oil

Crude oil prices are lower early today. Bears have downside near-term technical momentum. In May Nymex crude, look for buy stops to reside just above resistance at $88.00 and then at $89.00. Look for sell stops just below technical support at $87.00 and then at this week’s low of $86.06. Wyckoff's Intra-Day Market Rating: 4.0

Grains

Markets were narrowly mixed overnight. Beneficial moisture that has fallen over the US Plains and Corn Belt states the past few weeks is a bearish underlying factor for grains.

However, the specter of corn-planting delays likely this spring is somewhat limiting the downside in corn. The corn-planting delay issue will likely be a major market factor when trading gets under way next week.

Reports said cash basis levels for corn and soybeans in the US arefirm due to very limited farmer selling in the cash market.

TheCropSite News Desk

IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any traders and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.

Here is what the Commodity Futures Trading Commission (CFTC) has said about futures trading (and I agree 100%): 1. Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.



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