Commodities – Energy
Oil May Push to $80 as US Economic Data Continues to Improve
Crude Oil (WTI) $78.96 +$0.19 +0.24%
Oil is testing the $79 level after breaking out of a rising channel that had guided prices higher from the swing bottom below $70 set earlier this month. Continued bullish momentum will target the psychologically significant $80 level. The bulls may once again find their catalysts in improving US economic data, with tomorrow’s calendar set to bring the sixth consecutive monthly increase in the S&P/Case-Shiller Home Price Index as well as a three-month high in Consumer Confidence. Both releases stand to support continued gains, boosting the outlook for economic recovery of the world’s largest crude consumer.
Commodities – Metals
Gold, Silver May Extend Losses on US Rates Outlook
Gold $1104.38 -$2.93 -0.26%
Gold has drifted lower after testing resistance at the top of a falling channel that has guided spot rates lower for most of the current month as US data has boosted Fed rate hike expectations. Indeed, the metal retains a strong inverse correlation with the outlook for US monetary policy (as expressed by the spread between Dec’2010 and Mar’2010 fed funds futures), with that link now at a formidable 93%. This threatens further weakness as data showing improvements in house prices and consumer confidence prepares to cross the wires in US trading hours.
Silver $17.45 -$0.07 -0.40%
Positioning is strikingly similar to gold, with prices bouncing lower from resistance at the top of a falling channel established from early December. Also in line with its more expensive counterpart, a significant inverse correlation with the 2010 fed funds futures spread hints that further weakness is ahead if US data retains an upbeat tone as expected.
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