Crude Oil Creeps Higher on Lack of Evidence, Gold Breaks Bounces Back as ETF Holdings Fall

Commodities - Energy

Crude Oil Creeps Higher on Lack of Evidence

Crude Oil (WTI)        $77.48       -$0.10        -0.13%

Commentary: Crude oil is flat after rising $0.90, or 1.18% on Tuesday. Global economic concerns seem to be fading to the background a bit, with crude now more focused on the upside risks to demand from emerging markets and the downside risks to supply from Gulf of Mexico production. Markets in general and crude oil in particular, will need evidence that the world economy is set to slow sharply before prices respond with another leg lower. Thus far, the evidence has pointed to a modest slow down around the globe. Barring further deterioration in the data, crude oil should gradually move higher.

Tomorrow the Department of Energy will release the weekly inventory report; the API survey hinting at a neutral report (API: Crude -241K, Gasoline -412K, Distillate +979K) (5-Year Average: Crude -1334K, Gasoline -168K, Distillate +1800K) (Analyst expectations: Crude -1200K, Gasoline +650K, Distillate +1500K).

Technical Outlook: Unchanged from yesterday: “Prices continue to consolidate inside a rising channel. Initial support lines up near $75.00, while resistance is seen in the $78.13-79.38 congestion region.”


                                                                                                                                                                                                    

Commodities - Metals

Gold Bounces Back as ETF Holdings Fall

Gold      $1189.63       -$2.42        -0.20%

Commentary: In a sign that the downtrend in gold may be running out of steam, prices rebounded, pushing back over $1185 in Tuesday’s session. Interestingly, gold ETF holdings fell sharply, perhaps indicating that there was capitulation by a segment of gold investors. Nevertheless, a 200,000 troy ounce drop in holdings is a small fraction of the 66 million troy ounces gold ETFs hold in total. We are still taking a wait-and-see approach with regard to gold. If prices can push closer toward $1150, a compelling long set up may emerge. More aggressive traders can start building positions near $1185 with tight stops.

Technical Outlook: Prices have put in a Piercing Line bullish candlestick formation above support at a rising trend line established from the swing bottom in early February. A bounce sees initial resistance at the $1200 figure, followed by a horizontal barrier at $1215.47. Alternatively, a break lower sees initial support at $1170.

Silver      $17.74        +$0.04       +0.23%

Commentary: Silver rose in line with gold on Tuesday. As we have stated many times before: while there may be minor fluctuations in the gold/silver ratio between 60 and 70, silver and gold will remain tied at the hip for the foreseeable future.

Technical Outlook: Unchanged from yesterday: "Prices have formed a descending triangle chart formation above support at $17.45. This setup is typically a continuation pattern, hinting further gains ahead. That said, it also carries a negative connotation and may hint at an emerging bearish bias." A break below support exposes at the $17.00 figure, while a rebound sees initial resistance at $18.67.

                                                                                                                                                                                                        

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