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Is Gold Fever Back, or Is Wednesday's Surge Unsustainable?

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Daily commodity spot: A breakdown of the day's seven most active commodity futures.

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The following are the latest daily summaries of my ongoing intraday coverage, providing context to interpret price action. Any prices listed are for a contract's current "front month." Their direction tends to correlate with any ETFs listed for each.

Today's Highlight: Wednesday was largely a day of consolidating recent moves. Bonds bounced, currencies and crude oil fluctuated narrowly… Only gold had sponsorship, with a steep $15 surge that nearly fulfilled the target it established one day earlier.

Dollar Basket
Mar Contract DX; (UUP), (UDN)
Wednesday's gap up from Tuesday's fresh low barely filled the gap back to Friday's close. The balance of the session ranged narrowly sideways - all in positive territory. It was almost "ineffectual optimism," which would have been bearish from a contrarian perspective. There is potential for another fresh low before recovering.

Eurodollar
Mar Contract EC; (FXE)
Ranging narrowly throughout Wednesday, instead of rejecting Tuesday's rally to resistance, suggests that at least one more fresh high will print.

Gold
Apr Contract GC; (GLD)
Narrow ranging through much of Wednesday's session was suddenly interrupted by a $15 surge to 1774.00, which later extended to 1783.40. A new relative high at 1778.00-1780.00 was required, and it is now being tested. Closing above 1783.40 Thursday would put into play new highs above 1800.00. Closing under 1764.00 would trigger a very fast and steep near-term decline.

Silver
Mar Contract SI; (SLV)
Wednesday's open gapped down to test 33.90, but the balance of the session recovered back to 34.40 to fill the gap back to Tuesday's close. Tuesday's highs held as resistance, so its breakout was not confirmed by a second consecutive higher close. There is no active signal.

30-Year Treasury
Mar Contract US; (TLT)
The last test of 141-00 had already produced a sizable bounce up to 143-27. There was no bullish reason to revisit it Tuesday. A close under 141-00 was nevertheless still required to confirm the drop was still targeting 140-00. But Tuesday's retest reacted up sharply Wednesday, testing 142-05/142-12 resistance. Back under 141-26 would signal the decline had resumed. The bounce should otherwise avoid closing above 142-12.

Crude Oil
Apr Contract CL; (USO)
Tuesday's 106.48 high held as resistance Wednesday morning. A shallow reaction down was recovered to briefly probe a fresh high up to 106.75. But in all, Wednesday's session ranged narrowly. There wasn't much saber-rattling to compare the price action against, but it does confirm the rally has been related to conflict, and not necessarily to economic growth.

Natural Gas
Mar Contract NG; (UNG)
Wednesday's session did not immediately rally out of Tuesday's pullback. A mid-morning $0.07-$0.08 spike down needed to be recovered. It was recovered, testing Tuesday's 2.64 highs. Already rallying prior to Thursday would have been preferable for a valid breakout, but closing above 2.73 after the EIA report would still be credible for extending higher.
Author's note: Want to learn more about how I arrive at the following opinions? Join me for a live webinar after next Wednesday's close, February 29. Learn the basics of my methodologies, and then request an instant analysis of any market you are trading. Email me for access info at DailySpot@RodDavid.com.

Editor's note: Rod's analytical techniques are designed to efficiently identify targets and turning points for any liquid stock or market in any time frame. He applies his techniques live intraday, primarily to S&P futures, at RodDavid .com.
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No positions in stocks mentioned.
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