Fundamentals, Oil & Gold

Oil May Rise on Chinese Data, Gold Technicals Point Lower

Commodities – Energy

Oil Range Intact But Prices May See Gains on Chinese Industrial Production Data

Crude Oil (WTI)       $79.09        +$0.04       +0.05%
Oil prices may see some upward momentum within the familiar $76.80-80.50 range after China, the world’s second-largest crude consumer, reported that industrial production surged 16.1% in the year to October, the fastest pace of expansion in 17 months. That said, the data may not produce significant follow-through considering China also reported that new loans amounted to just 253 billion Yuan in the same period, the lowest in a year and substantially smaller than the 370 billion that economists expected ahead of the release. The drop in borrowing suggests Shanghai is starting backtrack on the loose lending practices that policymakers mandated amid last year’s credit crunch, hinting that the abundant liquidity that had fueled the Asian giant’s swift rebound from the global recession may no longer do so in the months ahead. Naturally, this has significant negative implications for crude demand and risk appetite in general. A third-quarter earnings announcement from department store chain Macy’s Inc late into European hours may prove to have a secondary affect on prices via the conduit of broad trends in risk sentiment, with most investors now fretting about the ability of the global economy to sustain growth on the back of private consumption after fiscal stimulus is withdrawn.

Commodities – Metals

Gold Technical Positioning Points to Bearish Reversal Ahead

Gold       $1114.43       +$8.60       +0.78%
Gold prices look positioned to reverse lower from record highs, with technical positioning revealing a Rising Wedge bearish reversal chart formation bolstered by negative divergence on the RSI momentum gauge. Fundamentally, a catalyst for bearish momentum may be disappointing earnings from UK gold miner Avocet Mining Plc, who reported a net loss of $4.1 million in the first half of the year compared with a profit of $22.4 million a year prior.

Silver       $17.47       +$0.13       +0.75%
Silver continues to consolidate, oscillating around $17.50. Fundamentally, the key drivers to watch include the impact from Chinese economic data released earlier, earnings from Avocet and the direction of risk sentiment in general.