Fundamentals, Oil & Gold
Oil, Metals Position to Correct Higher, US GDP Likely Catalyst
Thursday, 29 Oct 2009 3:05 EDT at 3:05 by Ilya Spivak · Leave a Comment
Commodities – Energy
Crude May Bounce as Prices Hit Strong Support Ahead of US GDP Report
Crude Oil (WTI) $77.54 +$0.80 +0.10%
Oil has continued to push lower, breaking below $78.17 to find support above $76.82 as expected. A falling trend line connecting recent lows bolsters the barrier at this juncture and traders may see a push to re-test above the $78 mark before bearish momentum resumes in earnest. The only fundamental catalyst really worth looking at is the US third-quarter GDP release; expectations call for output in the world’s largest economy and crude consumer to rise 3.2%, the first positive outcome since the three months to June 2008. The release will serve as proxy gauge for the health of the global economy as a whole, guiding the trajectory of the risk (stocks, commodities, high-yielding currencies) vs. anti-risk (US Dollar) dynamic that has served as the primary market theme for much of the past 12 months.
Commodities – Metals
Metals Positioning Supportive of Correction, US GDP Seen as Catalyst
Gold $1034.05 +$5.95 +0.58%
Gold prices broke lower from consolidation above $1037.03 but near-term support has been found at a falling trend line connecting recent lows. A push higher to re-test support-turned-resistance seems plausible, especially considering the RSI oscillator is showing positive divergence with the latest lows. As with oil, the US third-quarter GDP report is of prime importance fundamentally.
Silver $16.31 +$0.17 +1.04%
Silver prices look like an over-exaggeration of the move seen in gold, with prices racing sharply lower to find near-term support just ahead of the $16.00 figure. Momentum studies are now in oversold territory and divergent with the most recent lows, hinting that a correction towards $16.50-16.60 may be ahead before further losses materialize. Fundamentally, the US GDP report overrides any other considerations in the near term.
