Commodities are aiming higher amid a broad recovery in risk sentiment across financial markets. A firm US economic data set may reinforce the chipper mood.

Talking Points

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  • Crude Oil Continues to Carve its Own Path, API Inventory Report in Focus

Commodities are on the upswing in early European trade as risk appetite firms across financial markets. Regional shares are trading 0.5 percent higher on average, picking up where Asian bourses left off in the wake of a supportive Federal Reserve policy announcement. Unexpectedly strong third-quarter UK GDP figures are likewise offering a boost.

Growth-geared copper and crude oil prices are following stocks higher as the day’s news-flow buoys overall confidence in the trajectory of global economic growth. Meanwhile, gold and silver are enjoying a de-facto lift as the chipper mood dents safe-haven demand for the US Dollar by virtue of being denominated in terms of the benchmark currency.

S&P 500 index futures are trading firmly higher, hinting more of the same is likely ahead as Wall Street comes online. September’s US Durable Goods and Pending Home Sales reports headline the economic calendar in the hours ahead, with improvements expected on both fronts. This stands to reinforce a risk-on tone amid hopes that a firming recovery in the US will help offset sluggish performance in Asia and a recession in Europe.

WTI Crude Oil (NY Close): $85.73 // -0.94 // -1.08%

Prices continue to push lower as expected after taking out support at 87.66, the 38.2% Fibonacci expansion. Sellers continue to take aim at the 50% level at 83.76, with a break below that exposing the 61.8% Fib at 79.84. The 87.66 mark has been recast as near-term resistance. A reversal back above that targets the psychologically significant 90.00 figure and a falling trend line set from late September, now at 91.84.

COMMODITIES_Crude_Oil_Gold_Aim_Higher_as_Market_Sentiment_Improves_body_Picture_3.png, COMMODITIES: Crude Oil, Gold Aim Higher as Market Sentiment Improves

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1701.95 // -5.70 // -0.33%

Prices continue inch lower as expected following the formation of a bearish Dark Cloud Cover candlestick patter. Sellers have taken out support in the 1732.33-35.65 area, marked by a horizontal pivot level and the 23.6% Fibonacci retracement, to challenge the 38.2% level at 1693.06. A break below that targets the 50% Fib at 1661.32. Alternatively, a push back above 1735.65 targets 1781.07, the underside of a previously broken Rising Wedge pattern now recast as resistance.

COMMODITIES_Crude_Oil_Gold_Aim_Higher_as_Market_Sentiment_Improves_body_Picture_4.png, COMMODITIES: Crude Oil, Gold Aim Higher as Market Sentiment Improves

Daily Chart - Created Using FXCM Marketscope 2.0

Want to learn more about RSI? Watch this Video

Spot Silver (NY Close): $31.76 // +0.07 // +0.23%

Prices are inching lower as expected after completing a Bearish Engulfing candlestick pattern coupled with negative RSI divergence below the 35.00 figure. Sellers have now taken out support at 31.83, the 38.2% Fibonacci retracement, exposing the 50% level at 30.74. The 31.83 level has been recast as resistance, with a break above that targeting the top of a falling channel set from October’s swing high (32.29).

COMMODITIES_Crude_Oil_Gold_Aim_Higher_as_Market_Sentiment_Improves_body_Picture_5.png, COMMODITIES: Crude Oil, Gold Aim Higher as Market Sentiment Improves

Daily Chart - Created Using FXCM Marketscope 2.0

Want to learn more about RSI? Watch this Video

COMEX E-Mini Copper (NY Close): $3.568 // -0.002 // -0.06%

Prices broke support at 3.608, the 38.2% Fibonacci retracement, to challenge the 50% level at 3.537. A Spinning Top candle above this barrier warns of indecision and hints a bounce may be ahead. The 3.608 mark has been recast as resistance, with a push back above that exposing the 23.6% Fib at 3.695. Alternatively, a break below support targets the 61.8% retracement at 3.466.

COMMODITIES_Crude_Oil_Gold_Aim_Higher_as_Market_Sentiment_Improves_body_Picture_6.png, COMMODITIES: Crude Oil, Gold Aim Higher as Market Sentiment Improves

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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