Fundamentals, Oil & Gold

Oil and Gold Break Out Higher, Durable Goods in Focus

Commodities – Energy

Oil Prices Break Higher Eyeing $79 Ahead of Durable Goods Data

Crude Oil (WTI)      $77.04       +$0.37       +0.48%
Prices broke out of a rising channel that had guided prices higher from the swing bottom below $70 set earlier this month after DOE inventory fell more than expected. The path looks clear for a rise to test near $79. Thin liquidity conditions may prove to amplify volatility to produce significant momentum as November’s US Durable Goods Orders figures cross the wires. Forecasts call for an increase of 0.5% versus a -0.6% decline in the previous month, boosting expectations of future crude demand and offering a catalyst to validate the technical landscape.

Commodities – Metals

Gold, Silver Break Higher but Durable Goods Release Threatens Bulls

Gold       $1104.00       +$16.45       +1.51%
Gold has broken higher out of a Falling Wedge formation, with prices now seeing resistance at $1117.68 and $1141.78. However, the metal retains a strong inverse correlation with the outlook Federal Reserve monetary policy (as expressed by the spread between Dec’2010 and Mar’2010 fed funds futures), so the expected improvement in Durable Goods orders may work against bullish momentum by boosting US economic recovery and, by extension, rate hike expectations.

Silver       $17.33       +$0.22       +1.26%
Silver prices broke out a falling channel, with resistance now lining up at $17.53 and $17.80. As with gold, however, a significant inverse correlation with the 2010 fed funds futures spread hints that higher readings on tomorrow’s US Durable goods report may undermine a bullish outcome.