Oil May Retreat as Metals Extend Gains on Softer US Data

Commodities – Energy

Oil May Retrace Lower from Resistance at $82 on Home Sales Data

Crude Oil (WTI)       $81.43       -$0.08       -0.10%
Oil prices are testing major resistance at a potential double top ahead of the $82 level. The US economic docket offers mixed bag of catalysts. November’s Factory Orders are expected to have gained 0.5%, marking the third consecutive monthly increase (albeit the smallest one over the same period). Meanwhile, Pending Home Sales are set to drop -2.0%, the first decline since January 2009. On balance, this seems to be the more significant catalyst considering the US construction sector is the world’s single largest crude consumer, with lackluster sales hinting at slower building and pointing to a softer demand outlook. This may engineer a downward correction in the near-term, with initial support seen at $81.06.




Commodities – Metals

Gold, Silver May Extend Rebound on Softer US Data

Gold       $1121.40       +$0.20       +0.02%
Gold prices have pushed above falling trend line resistance set from early December. The way higher has been guided by a rising channel, with prices now squarely at resistance market by the formation’s upper boundary. The metal retains a significant inverse correlation with the outlook for US monetary policy for the coming year (as expressed by the spread between Dec’2010 and Mar’2010 fed funds futures), which means that a bullish breakout may be ahead as US Pending Home Sales decline. Such an outcome will see the next layer of resistance at $1141.88.

Silver       $17.58       +$0.01       +0.04%
Prices have broken above resistance at the upper boundary of a falling channel established from early December, exposing support-turned-resistance at $17.79. As with gold, a significant inverse correlation with the 2010 fed funds futures spread will mean that US Pending Home Sales figures offer the bulls the steam they need to push ahead in the near-term.




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