Fundamentals, Oil & Gold

Daily Commodities Fundamentals: Crude Continues To Range, Safe-Havens May Be Poised For Further Gains

Commodities – Energy

Crude Prices Fall Despite Large Stockpile Decline And Positive Durable Goods Data

Crude Oil (WTI)   $69.340                              -$0.890                             -1.27%
Crude prices remain fell for the session as savings gains hint that consumer spending will ikely diminish in the coming months. Fundamental influences exist that can both support and deflate current prices. Stockpiles will remain high as lower crude demand couples with continued production from OPEC countries. However, the prospect of lower spending will come as a double edged sword since on the one hand, lower demand should keep prices lower, while on the other lower spending will likely lead to further economic weakness and force the government to maintain deficits at record levels for some time. This will continue to weigh in on dollar pricing and effectively buoy prices somewhat for the medium term. Add to this political tensions that will disrupt (albeit minimally) supply from various countries and you will continue to have support for higher crude prices. While supply disruptions would have a minimal impact on the already large crude stockpiles, the disruptions will still have an effect on prices. In turn, the push and pull between these factors will likely keep crude prices ranging between major resistance levels of $65 and $73 with higher levels of volatility for the near-term.

Commodities – Metals

Safe-haven Metals Gain Despite Dollar Gains, Sign Of Turnaround In Sentiment?

Gold                   $940.200                           +$0.700                           +0.07%
Gold prices finished the session modestly higher despite dollar declines. The lack of movement may come as Gold prices approach resistance levels that have been hit over four times in the past month and have only been broken through once.  Fundamentals indeed stand in favor of further continued gains for the near to medium term. Inflationary pressures, though currently subdued, will likely emerge once a recovery takes hold. The US dollar will also remain subdued against its major counter-parts for some time and boost prices. Expect gains for the near to medium term.

Silver                 $14.1050                         +$0.0730                          +0.52%
Silver futures were flat for the day despite the positive data. Prices will rise if safe-haven metals gain, but due to its industrial applications, economic weakness will mute gains somewhat. On the other hand, if further signs recovery are released, silver will gain at a much faster rate than gold for the same reason. Expect modest gains for the near-term.

-Written by Stefan Tifigiu, CFDTrading Research
Questions/Comments about this article? Send them to Stifigiu@fxcm.com