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Commodities: Greece Buyback Triggers Rally, ISM Report Now in Focus

By , Currency Strategist
03 December 2012 14:23 GMT

Commodities are trading higher amid a pick-up in risk appetite as Greece begins a much-anticipated debt buyback but US growth fears may undermine optimism.

Talking Points

  • Commodities Rise with Risk Appetite as Greece Initiates Debt Buyback
  • US ISM Report, Worrisome Fiscal Cliff Chatter May Undermine Sentiment

Commodities are on the upswing in European trade after Greece began Greece moved forward with a bond buyback that – if successful – will open the door for the continued flow of bailout funds. Sentiment-linked crude oil and copper prices are following shares higher while gold and silver are finding support courtsy of ebbing haven demand for the US Dollar. S&P 500 stock index futures are pointing higher ahead of the opening bell on Wall Street, arguing for more of the same as North American exchanges come online.

On the data front, all eyes are on the US ISM Manufacturing report. Economists’ forecasts call for only a slight moderation in the pace of factory-sector growth, but USnews-flow has been turning softer relative to expectations in recent weeks and a disappointment here my undermine hopes for a US counterweight to anemic performance in Europe and Asia. Such an outcome may erode risk appetite, souring investors’ chipper mood and sending commodities lower anew. Worrisome chatter from the sidelines of the “fiscal cliff” debate may amplify negativity, with reports about a hardening of divisions between Treasury Secretary Tim Geithner and House Speaker John Boehner circling the wires.

WTI Crude Oil (NY Close): $88.91 // +0.84 // +0.95%

Prices continue to consolidate below the 23.6% Fibonacci expansion at 89.48. Near-term support is at 84.104, the November 7 low, with a break below that exposing the 80-50-81.43 area. Alternatively, a push above resistance targets the 38.2% expansion at 92.87.

Commodities_Greece_Buyback_Triggers_Rally_ISM_Report_Now_in_Focus__body_Picture_4.png, Commodities: Greece Buyback Triggers Rally, ISM Report Now in Focus

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1714.80 // -10.90 // -0.63%

Prices turned lower after putting in a Bearish Engulfing candlestick pattern below the 61.8% Fibonacci retracement (1748.70), dropping past the 38.2% level at 1719.60. Sellers now target the 23.6% Fib at 1701.60, a barrier reinforced by a rising trend line set from late June (now at 1700.18). A push below that initially targets the November 5 low at 1672.50. The 1719.60 level has been recast as initial resistance, with a reversal back above that aiming for the 50% retracement at 1734.15.

Commodities_Greece_Buyback_Triggers_Rally_ISM_Report_Now_in_Focus__body_Picture_3.png, Commodities: Greece Buyback Triggers Rally, ISM Report Now in Focus

Daily Chart - Created Using FXCM Marketscope 2.0

Want to learn more about RSI? Watch this Video

Spot Silver (NY Close): $33.41 // -0.83 // -2.42%

Prices broke support at a rising trend line set from the November 5 low, exposing the 23.6% Fibonacci expansion at 32.84. A further drop below that exposes the 14.6% barrier at 32.01. The trend line – now at 33.76 – has been recast as resistance. A reversal back above that eyes the 38.2% Fib at 34.18.

Commodities_Greece_Buyback_Triggers_Rally_ISM_Report_Now_in_Focus__body_Picture_2.png, Commodities: Greece Buyback Triggers Rally, ISM Report Now in Focus

Daily Chart - Created Using FXCM Marketscope 2.0

Want to learn more about RSI? Watch this Video

COMEX E-Mini Copper (NY Close): $3.650 // +0.044 // +1.22%

Prices broke resistance at 3.612, the 38.2% Fibonacci expansion, exposing the 50% barrier at 3.676. A break above that targets the 61.8% Fib at 3.742. The 3.612 level has been recast as support, with a drop back below that eyeing the 23.6% expansion at 3.531.

Commodities_Greece_Buyback_Triggers_Rally_ISM_Report_Now_in_Focus__body_Picture_1.png, Commodities: Greece Buyback Triggers Rally, ISM Report Now in Focus

Daily Chart - Created Using FXCM Marketscope 2.0

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak

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03 December 2012 14:23 GMT