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Commodities: Crude Oil, Metals Aim Higher on Buoyant Market Sentiment

Commodities: Crude Oil, Metals Aim Higher on Buoyant Market Sentiment

2012-10-31 10:42:00
Ilya Spivak, Head Strategist, APAC
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Commodities are on the upswing amid a recovery in risk appetite in European trade. S&P 500 futures hint more of the same is likely as Wall Street returns online.

Talking Points

  • Crude Oil, Metals Rise as Risk Appetite Swells in European Trading Hours
  • Chicago PMI May Amplify Positive Cues on Signs of Firming US Recovery
  • S&P 500 Futures Rise, Hinting at Risk-On Mood as Wall Street Reopens

Commodity prices are on the upswing in European trade amid a broad-based advance in risk appetite. Sentiment-geared crude oil and copper prices are following stocks higher while gold and silver are finding de-facto support as the chipper mood dents haven demand for the US Dollar. S&P 500 stock index futures are pointing firmly higher ahead of the opening bell on Wall Streetcompleted a bullish chart pattern, hinting more of the same is ahead.

The Chicago PMI report is in focus on the economic calendar. Expectations call for an uptick to 51.0 in October after a disappointing 49.7 print in the prior month, putting the gauge back above the 50 “boom-bust” level. The result stands to reinforce the recent improvement in US data and could further reinforce the pickup in risk appetite amid hopes that a firmer recovery in the world’s largest economy will be better able to offset headwinds from a recession in Europe and a slowdown in Asia. The weekly set of crude oil inventories from the DOE is likewise on tap.

WTI Crude Oil (NY Close): $85.68 // +0.14 // +0.16%

Prices are stalling above the 85.00 figure, a barrier reinforced by the 50%Fibonacci expansion at 83.76. Initial resistance lines up at 87.66, the 38.2% Fib, with a break above that targeting a falling trend line set from late September (now at 91.48). Alternatively, a break below 83.76 targets the 80.00 figure and 61.8% level at 79.84.

Commodities_Crude_Oil_Metals_Aim_Higher_on_Buoyant_Market_Sentiment_body_Picture_3.png, Commodities: Crude Oil, Metals Aim Higher on Buoyant Market Sentiment

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1709.60 // +0.25 // +0.01%

Prices put in a Bullish Engulfing candlestick pattern above support at 1693.06, the 38.2% Fibonacci retracement, hinting a bounce may be ahead. Initial resistance lines up at a falling trend line set from the October 5 swing high (1707.74). A break above that exposes the 1732.33-35.65 area, marked by a horizontal pivot level and the 23.6% Fib. Alternatively, a drop below support targets the 50% level at 1661.32.

Commodities_Crude_Oil_Metals_Aim_Higher_on_Buoyant_Market_Sentiment_body_Picture_4.png, Commodities: Crude Oil, Metals Aim Higher on Buoyant Market Sentiment

Daily Chart - Created Using FXCM Marketscope 2.0

Want to learn more about RSI? Watch this Video

Spot Silver (NY Close): $31.77 // -0.02 // -0.05%

Prices put in a bullish Morning Star candlestick pattern above support at 31.43, the 50% Fibonacci retracement, hinting a move higher is ahead. Resistance lines up at 32.36, the 38.2% level, with a break above that targeting the 33.51-66 area. Alternatively, drop below support exposes the 61.8% retracement at 30.50

Commodities_Crude_Oil_Metals_Aim_Higher_on_Buoyant_Market_Sentiment_body_Picture_5.png, Commodities: Crude Oil, Metals Aim Higher on Buoyant Market Sentiment

Daily Chart - Created Using FXCM Marketscope 2.0

Want to learn more about RSI? Watch this Video

COMEX E-Mini Copper (NY Close): $3.506 // +0.012 // +0.34%

Prices are retesting support-turned-resistance at 3.537, the 50% Fibonacci retracement, with a break higher targeting the 38.2% level at 3.608. Support lines up at 3.466, the 61.8% Fib, with a push below that exposing a rising trend line set from the June 4 low (now at 3.391).

Commodities_Crude_Oil_Metals_Aim_Higher_on_Buoyant_Market_Sentiment_body_Picture_6.png, Commodities: Crude Oil, Metals Aim Higher on Buoyant Market Sentiment

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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