Fundamentals, Oil & Gold

Oil Drop Continues, Gold May Bounce Before Selling Resumes

Commodities – Energy

Crude Oil Drops to $70 as Selloff Continues

Crude Oil (WTI)       $70.82       +$0.15       +0.21%
Oil prices have taken out support in the $72.86 – $75.13 congestion region and are now set to test the psychologically significant $70 level, with a push lower targeting $68.86. On the fundamental side of things, a decline in US jobless claims figures may help to engineer a bit of a boost on hopes for firmer demand from the world’s largest crude consumer. Trade Balance figures are also up for release. On balance, the path risk appetite and US Dollar remain the most compelling catalysts for price action.

Commodities – Metals

Gold Technical Positioning Points to Bullish Correction

Gold       $1126.75       -$1.85       -0.16%
A bullish Falling Wedge formation seems to be taking shape above support at $1123.38. The setup is bolstered by positive divergence on the RSI oscillator, hinting that a correction higher may be head. Wedge resistance is seen at $1135.40. The spread between March 2010 and December 2010 90-day fed funds futures has retained a strong inverse correlation gold prices, hinting that the outlook for US interest rates next year remains of primary concern and putting the onus on the jobless claims figures up ahead.

Silver       $17.40       +$0.03       +0.14%
Silver has found support above $17.23, previously the bottom of a range that had contained prices through the first half of November. As with gold, positive RSI divergence suggests a near-term upswing will be seen before bearish momentum continues, with initial resistance seen at $17.77. Fundamentally, the landscape is much the same as that of gold, the US rates outlook and therefore the jobless claims figure being of primary importance.