Oil Consolidates Below $70, Gold Prices Find Support
Commodities - Energy
Oil Consolidates Losses, $69.50 Support Eyed
Crude Oil (WTI) $69.62 -$0.59 -0.84%
Oil is trading lower after a lackluster New York session in which prices managed to hold above $69.50, a key support level. With a light U.S. economic calendar on Tuesday, oil, like stocks, may move on the economic sentiment du jour, as well as any surprises that come out of Europe. Of note is the fact that stocks are consolidating around the “flash crash” lows ($1066 S&P 500). A break below those lows will likely lead to a break of $69.50 support on oil, clearing the way for a medium-term decline toward the $65 figure. Crude and stocks have been tied at the hip recently, exhibiting a percent-change correlation of 0.71 over the last 21-day period.
Crude Oil (WTI) – Daily Chart
Commodities - Metals
Gold $1193.88 +$2.23 +0.19%
Prices are slightly higher after rebounding on Monday on the back of a sinking Euro. Gold remains 5 percent below the all-time highs set just seven trading sessions ago. It will be interesting to see whether gold has reestablished its safe haven status or if the latest move is only a dead cat bounce. As mentioned last week, it is not unusual to see a strong performing asset eventually give into a broader sell off as traders raise cash. Keep in mind that gold was a mere 8 percent off its all-time highs (922 vs 1002) when stocks found the bear market low in March 2009. Technically, prices have overcome resistance at 1186.71, the 38.2% Fibonacci retracement level of the upswing from the lows in March, with the door now open for a move toward the $1200 figure and the 23.6% Fib at $1210.67.
Silver $17.79 -$0.12 -0.66%
Silver prices are down, though they bounced 1.5 percent on Monday, slightly more than gold’s 1.2 percent increase. That compares to declines of 3.13 and 0.95 percent, respectively, on Friday. Silver may continue to underperform its more prominent counterpart in the current risk-averse environment. For perspective, prices were 37 percent off their highs in March 2009 (compared to 8 percent for gold). Technically, prices are testing horizontal support at $17.50, with a break lower exposing the $16.55 level. Significant upside resistance lines up at the $19.00 figure.
Spot Gold – Daily Chart
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