Fundamentals, Oil & Gold

Oil, Gold to Resume Downtrend Following Correction

Commodities – Energy

Oil Upswing Corrective, Further Losses Ahead

Crude Oil (WTI)       $74.45       +$0.02       +0.03%
Oil prices broke past the top of a falling channel established from the swing high in mid-January to meet resistance at $75.42. Near-term support lines up at $72.66. On balance, risk sentiment is likely to remain the prime catalyst for price action however with the correlation between the MSCI World Stock Index and crude prices now at 0.88. European shares are broadly lower after earnings from BP Plc, Europe’s largest oil company, disappointed on their fourth-quarter profit report. Meanwhile, US stock index futures are trading down 0.25% ahead of the opening bell, suggesting the path of least resistance leads lower from here.

Commodities – Metals

Metals to Resume Downtrend as Risk Assets Sink

Gold       $1103.05       -$2.45      -0.22%
Prices have met resistance at the top of a falling channel and put in a Hanging Man candlestick, hinting that a turn lower may be ahead from here. That said, a bearish close on the current bar is necessary for confirmation and a push higher may yet materialize, with initial resistance seen at $1117.90. As with oil, a formidable correlation with the MSCI World Stock Index (now at 0.92) bolsters the case for a bearish scenario as European exchanges and US equity index futures both trade lower.

Silver       $16.57       -$0.10        -0.58%
Silver has bounced higher after testing below the $16.00 figure to meet support-turned-resistance at $16.73. As with both gold and oil, a strong correlation with global equities (now at a whopping 0.98) suggests the move to be corrective, with further downside ahead as risk aversion returns in European trading.