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Crude Oil, Gold May Push Higher on Upbeat Fed Beige Book

Crude Oil, Gold May Push Higher on Upbeat Fed Beige Book

2013-03-06 12:20:00
Ilya Spivak, Head Strategist, APAC
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Crude oil and gold may rise on improving risk appetite and swelling inflation expectations if a supportive Fed Beige Book survey boosts US recovery hopes.

Talking Points

  • Crude Oil and Copper to Follow Stocks Higher on Upbeat Fed Beige Book Survey
  • Gold, Silver to Rise as US Recovery Hopes Coupled with QE Boost Inflation Bets

Commodities are in consolidation mode in European trade as traders wait for a clear catalyst to spark directional momentum. The trigger may come from the Federal Reserve’s Beige Book survey of regional economic conditions. A supportive tone mirroring the improvement in US economic data over the past month may boost hopes for resilient recovery in the world’s largest economy in the face of strengthening fiscal headwinds following the triggering of “sequester” spending cuts last week.

That may boost risk sentiment, pushing shares higher and offering support to cycle-sensitive commodities including crude oil and copper. Precious metals may likewise advance as an improving US growth profile given a context of re-commitment to strong Fed stimulus by Federal Reserve Vice Chair Janet Yellen earlier this week is likely to boost inflation expectations. This stands to lift demand for anti-fiat assets, boosting gold and silver. S&P 500 stock index futures are on the upswing ahead of the opening bell on Wall Street, reinforcing the case for a risk-on scenario.

WTI Crude Oil (NY Close): $90.82 // +0.70 // +0.78%

Prices are retesting support-turned-resistance at 91.13, the 50% Fibonacci retracement. A break above this barrier targets the 38.2 % level at 92.80. Near-term support is at 89.45, the 61.8% Fib, with a drop below that aiming for the 76.4% retracement at 87.38.

Commodities_Oil_Gold_May_Push_Higher_on_Upbeat_Fed_Beige_Book_body_Picture_3.png, Crude Oil, Gold May Push Higher on Upbeat Fed Beige Book

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1575.50 // +1.73 // +0.11%

Prices are testing support at 1570.37, the 38.2% Fibonacci expansion. Near-term resistance is at 1589.36, the 23.6% level, with a break above that aiming for the February 26 high at 1620.09. Alternatively, a break downward initially aims for the 61.8% Fib at 1554.62.

Commodities_Oil_Gold_May_Push_Higher_on_Upbeat_Fed_Beige_Book_body_Picture_4.png, Crude Oil, Gold May Push Higher on Upbeat Fed Beige Book

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Silver (NY Close): $28.70 // +0.14 // +0.48%

Prices are testing support at 28.46, the 23.6% Fibonacci expansion. Near-term resistance is in the 29.42-92 area, with a break higher exposing a falling trend line now at 30.96. Alternatively, a reversal below support targets the 38.2% level at 27.86.

Commodities_Oil_Gold_May_Push_Higher_on_Upbeat_Fed_Beige_Book_body_Picture_5.png, Crude Oil, Gold May Push Higher on Upbeat Fed Beige Book

Daily Chart - Created Using FXCM Marketscope 2.0

COMEX E-Mini Copper (NY Close): $3.516 // +0.014 // +0.40%

Prices are testing support marked by a rising trend line set from early June (3.516). A push lower exposes 38.2% and 50% Fibonacci expansion levels at 3.495 and 3.463 respectively. Near-term resistance is at 3.536, the 23.6% expansion, with a break higher targeting the February 28 high at 3.601.

Commodities_Oil_Gold_May_Push_Higher_on_Upbeat_Fed_Beige_Book_body_Picture_6.png, Crude Oil, Gold May Push Higher on Upbeat Fed Beige Book

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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