Gold - $1257.75 // $2.20 // 0.18%
Commentary: A day of economic jitters and profit taking in the broad financial markets led to gains for gold with the metal rallying $8.80, or 0.70% over the Monday-Tuesday period. There is little standing in the way of the safe haven metal with bulls making it clear that they are not concerned with day to day events, but rather long-term issues related to the sovereign debt and the implications for the purchasing power of fiat currencies. Underpinning this sentiment is the rise in gold ETF holdings, which increased 120K troy ounces from last Friday to reach nearly 66.8 million troy ounces, or just slightly below the 66.9 million level set last week. There are risks, however, as a failure to break the all-time highs would likely lead to an exodus by momentum traders.
Technical Outlook: Prices have resumed their advance, lifting from support at the bottom of a rising channel established from the July low en route to challenge the record high at $1,265.30. However, emerging signs of negative RSI divergence warn of a reversal downward around the corner. Initial support lines up at $1,243.27.
Longer term, gold positioning reveals bearish cues with clear negative RSI divergence hinting that a major top may be taking shape. Confirmation of a downward reversal in line with our fundamental outlook requires a weekly close below a rising trend line set from the swing bottom in late 2008, now at $1,198.36.
Silver - $19.90 // $0.11 // 0.57%
Commentary: Silver fell modestly over the Monday-Tuesday period, shedding $0.11, or 0.51%, in contrast to the two days of gains put in by gold. As we have stated in the past, gold and silver will achieve similar performance; these two days of underperformance by silver are merely correcting for the past two weeks of outperformance. The gold/silver ratio stands at 63.25, up slightly from 62.75 last week.
Technical Outlook: Prices have stalled below the $20.00 figure after taking out resistance at the mid-May swing high ($19.83). A Shooting Star candlestick hints the bears may be set for a comeback, with renewed selling initially targeting support in the $19.28-$19.47 region.
Crude Oil (WTI) - $73.66 // $0.43 // 0.58%
Commentary: Crude oil kicked off the new, holiday-shortened week on a down note, shedding $0.51, or 0.68%. Things were worse for the commodity in the early part of Tuesday's trade, as crude was down almost $2 at one point, but news of an explosion at the Cadereyta refinery in Mexico caused prices to rebound. Specifically, gasoline and distillate prices spiked and oil just came along for the ride. In fact, the products actually finished the session with gains; but the latest indications are that output will not be noticeably impacted by the blast; thus we see the entire complex, including crude oil falling again in overnight trade. Due to the Labor Day holiday, the DOE inventory report will be released on Thursday, a day later than usual. Without the report for guidance, look for prices to take their cues from the sentiment du jour, as the US economic calendar remains uneventful.
Technical Outlook: Prices continue to consolidate above horizontal support at $71.09, with near-term resistance lining up at $75.59. This barrier is reinforced by support-turned-resistance at the bottom of a rising channel set from late May, now at $76.57. Back-to-back Doji candlesticks at range resistance hint a downswing may be ahead, but substantive confirmation remains elusive for the time being.
lya Spivak is currency strategist and and Sumit Roy is a researcher for DailyFX.
