Commodities May Rise if US GDP Boosts QE3 Hopes

All eyes are on the second-quarter US Gross Domestic Product. Expectations call for output growth to slow to an annualized pace of 1.4% from 1.9% recorded in the three months through March. The outcome is likely to be interpreted in the context of Fed stimulus expectations ahead of next week’s FOMC policy meeting. This means a soft print may be counter-intuitively interpreted as supportive for risk appetite in that it is perceived as increasing the chance of further accommodation. Indeed, S&P 500 stock index futures are trading firmly higher ahead of the report. Such an outcome opens the door for growth-geared crude oil and copper prices to follow shares while gold and silver find renewed support in inflation-hedge demand amid fears of US dollar dilution.

Comex E-Mini Copper (NY Close): $3.354 // -0.026 // -0.77%

Prices are pushing above resistance in the 3.378-90 area marked by the July 10 daily close and the 23.6% Fibonacci expansion to challenge the 14.6% level at 3.445. A break above that targets 3.535. Trend line support comes in at 3.336, with a push below that targeting the 38.2% Fib at 3.269.

WTI Crude Oil (NY Close): $89.39 // +0.42 // +0.47%

Prices are edging higher from support in the 87.65-88.32 area, marked by the July 3 closing high and the 14.6% Fibonacci expansion, to test the 90.00 figure. A break higher from here exposes the July 19 high at 93.21. Alternatively, a break lower exposes the 23.6% level at 85.37.