Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Signals Returning Commodities Strength

Commodities / CRB Index Mar 02, 2009 - 04:56 AM GMT

By: Donald_W_Dony

Commodities Best Financial Markets Analysis ArticleKEY POINTS:
• Weaker U.S. dollar in March spells increasing stability in commodities
• CRB still pinned under 240 resistance level; more range trading expected
• Gold advance anticipated in early April; first target is $1,000 to $1,025, second is $1,200


• Copper continues base-building; early evidence of growing strength in the business cycle
• Base metals continue stabilizing into 2nd quarter
• Natural gas hits long-term support level of $4.40; will it hold with lower demand?
• Oil remains flat with $33 to $36 key support
• Agricultural grain prices slowly emerge from support; soybean leads; upward pressure expected in spring

I am forever fascinated by the markets. Although events and causes may be in constant flux, the overall effects continue to repeat themselves. Commodities are a good example of the perception.

Going down means going up
Near the end of the last great bear market is 2002, the decline of the equity markets was largely driven by the bursting of the tech bubble. The U.S. dollar was steadily accumulating an enormous debt. Although the amount was only $3.5 trillion, it raised considerable concern in the FX market. Currency traders began to sell off the dollar in early 2002, from its high of more than $1.25 to a low of $1.02 by the end of the year. Equity markets, in the meantime, finally found a bottom in October.

Commodities, normally a late-performing group, led the stock market by 12 months. Gold, the most sensitive to the movements of the dollar, reached a low seven months before the Commodity Research Bureau (CRB) Index and 19 months before the S&P 500 (see Chart 1). Fundamental demand for natural resources was still extremely weak, but prices rose on the expectation of a lower greenback.

Today’s scenario is not much different. Although the causes of this severe bear market are from the housing and financial markets, the effects are closely related to 2002.

Gold bottomed in November 2008, and the CRB hit a low in December. The stock market can be expected to remain volatile for the rest of 2009, with a potential bottom in October (read the “Equities” section for more information).

The U.S. dollar, which is buried under more than $11 trillion of national debt now (the prime driving force for commodities at the moment), is expected to trade lower throughout March and into April. Models (see Chart 2 on page 2) are indicating downward pressure for the next six to seven weeks, with a target of $0.80 to $0.81.

Presently, the global appetite for commodities is deeply depressed, but the recent strong breakout in gold, stability in base metals and slow rise in soybean, corn and wheat

Additional research can be found in the March newsletter. Go to www.technicalspeculator.com and click on member login.

Your comments are always welcomed.

By Donald W. Dony, FCSI, MFTA
www.technicalspeculator.com

COPYRIGHT © 2009 Donald W. Dony
Donald W. Dony, FCSI, MFTA has been in the investment profession for over 20 years, first as a stock broker in the mid 1980's and then as the principal of D. W. Dony and Associates Inc., a financial consulting firm to present.  He is the editor and publisher of the Technical Speculator, a monthly international investment newsletter, which specializes in major world equity markets, currencies, bonds and interest rates as well as the precious metals markets.   

Donald is also an instructor for the Canadian Securities Institute (CSI). He is often called upon to design technical analysis training programs and to provide teaching to industry professionals on technical analysis at many of Canada's leading brokerage firms.  He is a respected specialist in the area of intermarket and cycle analysis and a frequent speaker at investment conferences.

Mr. Dony is a member of the Canadian Society of Technical Analysts (CSTA) and the International Federation of Technical Analysts (IFTA).

Donald W. Dony Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in