Talking Points

  •  Crude Oil, Copper Follow Stocks Lower on Greek Coalition Setback
  •  Gold and Silver Sold as US Dollar Rides Haven Demand Higher

Commodities are moving lower in early European trade as risk aversion grips financial markets once again, weighing on growth-geared crude oil and copper prices and driving safe-haven flows into the US Dollar, thereby applying de-facto downward pressure to gold and silver. The rout follows news that Antonis Samaras, leader of Greece's center-right New Democracy (ND) party, failed to cajole enough support to form a coalition government following the weekend's general election.

The task now falls on Alexis Tsipras, the head of the Syriza party that ran on a platform of renegotiation Greece's obligations under the EU/IMF bailout program. Investors are concerned that the elevation of Tsipras will threaten to unravel hard-fought efforts to keep Greece within the Eurozone and mark the first forcible exit a country from the currency bloc, a prospect with as-yet unpredictable implications. The return of UK markets after yesterday's absence for a bank holiday is likely compounding the dour mood as London's traders get their chance to price in the weekend's worrying news-flow.

Looking ahead, S&P 500 stock index futures are trading sharply lower, hinting that current trends are poised to continue as Wall Street comes online. The US economic calendar offers a lackluster helping of low-tier economic indicators, suggesting little stands to derail current momentum. API will also release the preliminary set of weekly crude inventory figures.

WTI Crude Oil (NY Close): $97.94 // -0.55 // -0.56%

The selloff marked by a Harami candlestick pattern identified last week found interim support in the 95.78-96.56 area marked by a horizontal barrier in play since early November 2011 as well as the 100% Fibonacci expansion. A hammer candlestick hints that a bounce may be ahead. Initial support lines up at 98.89, the 76.4% expansion, with a break above that exposing the 61.8% level at 100.33. Alternatively, a push through support targets 92.51.


Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1638.55 // -3.67 // -0.22%

Prices are testing support in the 1630.00-1637.73 area marked by the bottom of a Triangle chart formation carved out since late March and the 23.6% Fibonacci expansion. The Triangle setup is typically indicative of continuation, which in this case carries bearish implications. A break through support initially exposes the 38.2% expansion at 1611.79. Triangle top resistance is now at 1661.75.


Daily Chart - Created Using FXCM Marketscope 2.0

Spot Silver (NY Close): $30.06 // -0.31 // -1.02%

Prices are testing below support at 29.71, with a break lower exposing the bottom of a falling channel established since early Mach now at 29.04. Near-term resistance lines up in the 31.20-31.36 area, marked by the channel top and a horizontal former support level now recast as an upside barrier.


Daily Chart - Created Using FXCM Marketscope 2.0

COMEX E-Mini Copper (NY Close): $3.724 // +0.052 // +1.40%

Prices are testing through support at 3.713, with a break lower exposing a rising trend line set from early October now at 3.638. Initial resistance is found at a shorter-term rising trend line that formerly acted as support set from mid-March, now at 3.864.


Daily Chart - Created Using FXCM Marketscope 2.0

--- Written by Ilya Spivak, Currency Strategist for

To contact Ilya, e-mail Follow Ilya on Twitter at @IlyaSpivak