The precious metal complex shone last week as the US Fed announced to  keep interest rates at Zero-ish levels until late Y 2014 and indicated  further monetary easing is possible.

The statement and the press conference held by Chairman Ben Bernanke were  Dovish enough to push the USD South, helping the metals to move North.

Upbeat market sentiment pushed Gold above Key resistance and resume  its long-term up-trend.

While Gold has grabbed headlines, and much of the market focus, it  under-performed Silver which is seeing strong investment demand despite  uncertain industrial outlook.

The US Fed stated on 25 January that current economic conditions are likely  to warrant exceptionally low levels for the policy rate “at least through late Y  2014”. The policymakers are generally expected to maintain a highly  accommodative stance for monetary policy.

A prolonged low-rate environment is Bullsih for Gold prices.

The policymakers acknowledged that Global economic outlook remained highly  uncertain and revised lower growth forecast over the next 3 yrs. With that  the USD was pressured. That,  together with an unwinding of Euro-Short  positions in the near-term, should push Gold higher IMO.

Gold finished + 4.09% last week, but Silver’s gain was + 6.64%  (impressive). One of the reasons driving precious metals higher last  week was speculations over QE-3.

Let’s look at what happened after QE-2 was announced. The US Fed announced  details of QE-2 on 3 November 2010. But, Chairman Bernanke’s speech at Jackson  Hole, WY on 27 August 2010 triggered speculations over the issue.

The closing price of Silver on 27 August 2010 was 19.05. Then  the price rose 30% to 24.8 on 3 November 2010.

After last week’s FOMC meeting, Silver closed at 33.27. So, with that  it may move above 40 if the US Fed announce QE-3, triggering a  rally of a size similar to that during QE-2.

Net length for Comex Silver futures rebounded in recent weeks, but the size  was well-below that of August 2010. Net Long was above 20-K contracts in August  2010, but it shrank to around 16-K contracts last week. In August 2010, Comex  Silver Longs began to cover following the details of QE-2 in November 2010.  Repeat of the situation this time would send Silver price  even higher.

From price movements of Gold and Silver in 2-H of Y 2011, after  announcement of QE-2, and the recent sharp decline in Gold-Silver ratio, signals  that Silver is the better bet for trading the QE theme.

Crude Oil trade was volatile last week, up one day and down  the next, on Friday most of the gains were pared after a survey  suggested that the embargo on Iran would have little impact on Crude Oil prices.

The front-month contract for WTI Crude Oil ended the day almost flat at  99.74 bbl, and the equivalent Brent Crude contract settled at 110.79,  +0.89%, after rising to as high as 111.89 earlier.

The EU approved a plan to embargo Crude Oil imports from Iran from July in an  attempt to pressure the Country over nuclear development.

The Iranian parliament is discussing a bill to immediately stop all Crude Oil  shipment to Europe. While Crude Oil prices were boosted over the past few weeks  by tensions over Iran, the impacts of the sanctions are expected to be less than  significant than anticipated. It’s believed that Iranian Crude Oil would be more  than replaced by other countries such as Saudi Arabia. And Iran would continue  to sell to its main Asian customers while both sides position negotiations over  the nuclear issue

Gold’s rally from 1523.9 extended as expected and tapped a  fresh high at 1739.8. As I have mentioned before, the whole  correction from 1923.7 may have finished with 3 waves down to 1523.9.

The initial bias remains on the Northside to see 1804.4 resistance  first. A clear break there confirms this Bullish POV, and target 1923.7 and  above.

On the Downside: a break of 1649.2, the  Key support is needed to signal short term topping. Baring that, the near  term outlook will remain cautiously Bullish even in case of a retreat.

The Big Picture: price actions from 1923.7, the high, are  viewed as a medium term consolidation pattern. This current development is  slightly favoring the case that the consolidation finished with 3  waves down to 1523.9. Sustained trading above 55-Days EMA affirms this. Further  break of 1804.4 indicates that the long term up-trend has resumed and will  look for another high above 1923.7. But, in case of another fall, I  expect strong support from 1478.3/1577.4, the support Zone, to contain any  downside to finish the consolidation and bring up-trend resumption.

The Long Term Picture: with 1478.3, the Key support  intact, there is no change in the long term Bullish outlook for Gold. Some more  medium term consolidation cannot be ruled out, but I anticipate an  eventual break of 2000, the psych mark, and higher in the long run.  Stay tuned…

Comex Gold Continuous Contract Monthly Chart

Comex Silver (SI)

Silver’s rally continued as expected and tapped 33.96 last week. As I  have said, the whole decline from 35.60 finished after drawing support from  26.15. Now that 33.74, the Key resistance is broken, a further rise should  be seen to 35.60, the next Key resistance.

On the Downside: a clear break of 31.525, the  Key support, is needed to signal a short term topping. Barring that, I  am Bullish Silver even in case of a retreat.

The Big Picture: I am treating price actions from 26.15 as  consolidation in the larger decline from 49.82 high. That is, the rise from  26.145 is the 3rd wave, and should be limited by the resistance at 35.70, and  bring reversal for a new low below 26.145. But, a clear break of 35.70  will indicate bottoming, with a Double Bottom reversal pattern, and turn focus  back to 40, the psych mark.

The Long Term Picture: the main question remains on whether  49.82 is a medium term or long term Top. This current development is starting to  favor the latter. I would prefer to see sustained break of 61.8% retracement of  8.4 to 49.82 at 24.22 to confirm. Stay tuned…

Comex Silver Continuous Contract Monthly Chart

Nymex Crude Oil (CL)

Crude Oil struggled in tight range around 100 psych mark all  of last week. With the resistance at 102.06 intact, deeper decline is still  mildly in favor to 100% projection of 103.74 to 97.70 from 102.06 at 96.02 and  below. But, I expect Strong support from 92.52, the cluster  support Zone, 38.2% retracement of 74.95 to 103.74 at 92.74, to contain any  Southside action, and bring on a rebound.

On the Upside: a break above 102.06 will bring retest of the  resistance at 103.74 IMO.

The Big Picture: the pull back from 114.83 completed at  74.95, and medium term rally from 33.2 is not finished yet.  I will tentatively treat rise from 74.95 as resuming of the rally. A  clear break of 114.83 targets 61.8% projection of 33.2 to 114.83 from 74.95 at  125.40.

On the Downside: a break of 92.52, the Key support,  will  indicate that correction pattern from 114.83 is going to extend  further with another falling leg to 74.95 and below before completion.

The Long Term Picture: Crude Oil is in a long term  consolidation pattern from 147.27, with the 1st wave completed at  33.2. The corrective structure of the rise from 33.2 indicates that it  is 2nd wave of the consolidation pattern. While it could make another  high above 114.83, I anticipate Strong resistance ahead of 147.24 to bring  reversal for the 3rd leg of the consolidation pattern. Stay tuned…

Nymex Crude Oil Continuous Contract Monthly Chart

Nymex Natural Gas (NG)

Nat Gas drew Strong support from the medium term falling channel  low, and formed a short term bottom at 2.231 and bounced.

A further rise is mildly in favor initially for this week, possibly  to 55-Days EMA at 3.074. But, any Northside is expected to be limited by 3.12,  the cluster resistance Zone, 61.8% retracement of 3.689 to 2.231 at 3.132,  and bring on the down trend resumption. A break below 2.512, the minor  support,  will turn bias back to the Southside for retesting 2.231  first.

The Big Picture: the whole down trend from 13.694, the Y  2008 high, has resumed with break of 2.409, the Key support level. This current  decline targets 100% projection of 6.108 to 3.255 from 4.983 at 2.130 or even  further to 2.0, the psych mark. A break of 3.255 Support turned Resistance is  needed as the 1st sign of reversal. that said I am Bearish Nat Gas.

The Long Term Picture: the break of 2.409 indicates that  whole down trend form 15.78 is still in progress and would now possibly extend  to the Y 2002 low of 1.96 and lower. Stay tuned…

Nymex Natural Gas Continuous Contract Monthly Chart