Commodity prices are down in early European trade as risk aversion grips financial markets following a Standard & Poor’s downgrade of Spain’s credit rating. Sentiment-linked crude oil and silver prices are following shares lower while gold and silver are facing de-facto selling pressure as the dour mood stokes safe-haven demand for the US dollar. S&P 500 stock index futures are pointing sharply lower, hinting more of the same is on tap as Wall Street comes online.
On the economic data front, all eyes are on the first-quarter US gross domestic product figures, where expectations point to a 2.5% annualized quarterly increase after a 3% rise in the three months through December. The result is likely to be interpreted in the context of this week’s Federal Open Market Committee policy meeting, with a better-than-expected outcome carrying the possibility of reminding traders that Ben Bernanke’s commentary was hardly as supportive of QE3 as the markets’ initial reaction suggested. Alternatively, a disappointing print will further fuel stimulus bets, which certainly seems supportive for precious metals but may also (somewhat counter-intuitively) help on the risk appetite front as well.
WTI Crude Oil (NY Close): $104.55 // +0.43 // +0.41%
Prices are showing a Shooting Star candlestick below resistance at 104.90, a former support level reinforced by the top of a falling channel set from early March. The setup warns of bullish exhaustion and hints a turn lower maybe ahead. Initial rising trend line support is now at 101.98.
Spot Gold (NY Close): $1,657.43 // +13.80 // +0.84%
Prices the top of a falling channel set from early March now at 1,660.60, with a break higher exposing 1,680.35. Support lines up at 1,638.02, the 23.6% Fibonacci expansion. Absent a daily close above the channel top, the overall trend remains bearish.