Commodity prices are yielding mixed results in European trade as traders wait for guidance from the US economic data set to establish near-term direction cues. May’s US Consumer Confidence reading and the Dallas Fed Manufacturing Activity gauge are on tap, with expectations pointing to improvements on both fronts. Broadly speaking, data collected by Citigroup suggests US economic data has stabilized relative to expectations in May after three months of deterioration. This lays the foundation for stronger outcomes to buoy hopes that a firming (albeit unevenly so) recovery in North America can help offset weakness in Europe and Asia.
In the context of heavy selling across the risky asset space over recent weeks, this may help drive a recovery in sentiment. As noted yesterday, this would fall within the context of a general tendency toward corrective profit-taking on risk-off exposure accumulated over recent weeks. This bodes well for growth-geared crude oil and copper prices and may likewise offer a lift to gold and silver amid ebbing demand for the safe-haven US dollar. Upside momentum in the precious metals space may be limited however in that firmer data would work against QE3 expectations, denting the appeal; of alternative store-of-value assets. S&P 500 stock index futures are pointing firmly higher ahead of the opening bell no Wall Street, reinforcing the likelihood of a risk-on scenario in the hours ahead.
WTI Crude Oil (NY Close): $90.86 // +0.20 // +0.22%
Prices put in a Harami candlestick pattern above resistance-turned-support at 90.14, the Sept. 7 closing high, hinting a corrective bounce may be ahead. Positive RSI divergence reinforces the case for an upside scenario. Initial resistance lines up at 92.51, a former support marked by the Dec. 16 low, with a push above that targeting 95.41 (another former bottom now acting as resistance at the Feb. 2 low).
Spot Gold (NY Close): $1,580.94 // +7.91 // +0.50%
Prices continue to consolidate above support in the 1,522.50-1,532.45 area. Near-term trend line support-turned-resistance lines up at 1,584.56. A break above this boundary exposes the 1600/oz figure followed by the top of a channel set from late February, now at 1,621.73.