Crude Oil Steady Ahead of China Data, Gold Tests $1353 Support
Commodities – Energy
Crude Oil Steady Ahead of China Data
Crude Oil (WTI) - $87.48 // $0.75 // 0.86%
Commentary: Crude oil is kicking off the week slightly to the upside, as prices continue to consolidate recent gains that have established prices at or above the triple digit threshold. Key economic data will be reported in the coming week, the most important of which is the China Consumer Price Index for January. Expectations are for a 5.4% year-over-year increase, up from 4.6% in the prior month and the highest YoY reading since July, 2008. China has already raised interest rates three times since October in an effort to combat rising inflation. Markets will be closely examining the latest CPI report to gauge whether more rate hikes are in the offing.
Technical Outlook: Prices are testing support at the January low near $85. A break through this juncture would amount to a significant bearish reversal, opening the door to longer-term selling. Near-term resistance lines up at $88.06, the 61.8% Fibonacci retracement of the rally from January’s low.
Commodities – Metals
Gold Tests $1353 Support
Gold - $1363.95 // $0.15 // 0.01%
Commentary: Despite a late-week sell off, gold managed to eke out a gain last week, but price action remains lackluster as ETF holdings continue to decline amid a distinct lack of catalysts for the metal. The global economic outlook seems to be improving and inflation in the developed economies remains relatively low. Like oil, gold may take its cues this week from the China CPI data.
Technical Outlook: Prices are holding just above support at $1352.50, the 38.2%Fibonacci retracement of the 1/3-1/28 downswing, with a bearish Dragonfly Doji candlestick pointing to fading bullish momentum and hinting a reversal lower is ahead.
Silver - $30.09 // $0.12 // 0.39%
Commentary: Silver is back below $30 after rebounding above that level for the first time in a month last week.
The gold/silver rose slightly to 45.4, near the lowest since April 2006. (The gold/silver ratio measures the relative value/performance of the two precious metals. A higher ratio indicates gold outperformance, while a lower ratio indicates silver outperformance)
Technical Outlook: Prices remain perched below the 76.4% Fibonacci retracement of the 1/3-1/28 downswing, a former resistance level acting as support. From here, the bulls aim to challenge the 30-year high at $31.24.
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