Crude Oil, Gold and Silver Set to Follow S&P 500 Higher
Commodities – Energy
Crude Oil Set to Follow S&P 500 Higher
WTI Crude Oil (NY Close): $100.10 // +3.19 // +3.29%
Prices have popped back above the 23.6% Fibonacci retracement of the drop from the May 2 high at $99.41, clearing the way for a test of the 38.2% level at $102.35 On balance, anything shy of a daily close above the 50% mark at $104.73 amounts to consolidating within an overall bearish structure, with a break below $94.65 needed to mark the beginning of the next leg lower.
A firm and strengthening correlation between the WTI contract and the S&P 500 put risk appetite in focus, with all eyes on a long list of US economic releases including April’s Existing Home Sales and Leading Indicators figures, May’s Philadelphia Fed business outlook survey, and the weekly jobless claims results all on tap. Stock index futures are firmly higher ahead of the opening bell on Wall Street, pointing the way higher for the crude as sentiment-linked assets continue to move together.
Commodities – Metals
Spot Gold (NY Close): $1497.15 // +10.35 // +0.70%
Gold continues to consolidate between $1519.55, the 50% Fibonacci retracement of the drop from the May 2 high and a rising trend line set from late January. Piercing this downside barrier would amount to a material, medium-term trend change, opening the door for protracted gold weakness over the coming weeks. Short term support and resistance line up at 1489.19 and $1505.98, marking the 23.6 and 38.2 percent Fibonacci retracements of the decline from the May 2 high.
As with oil, gold prices remain firmly correlated with the S&P 500, with index futures hinting the yellow metal is set to follow the spectrum of risky assets higher. Likewise in line with crude, an action-packed US data set is in focus ahead.
Spot Silver (NY Close): $35.11 // +1.14 // +3.36%
Prices continue to consolidate below $36.44, the 23.6% Fibonacci retracement of the 4/25-5/6 decline. A push higher through this barrier exposes the 38.2% level at $38.99. Near-term support lines up at $32.32.
Correlations with the S&P 500 remain heavy here as well, hinting silver remains anchored to broad-based sentiment trends. Interestingly, the gold/silver ratio has carved out a significant inverse relationship with the benchmark stock index, suggesting the cheaper metal outperforms at in “risk-on” markets and underperforms amid risk aversion.
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