Commodities are under pressure amid broad-based about the impact of Hurricane Sandy but German and US economic data may help countervail negativity.

Talking Points

  • Crude Oil, Metals Start Week Under Pressure on Hurricane Sandy Jitters
  • German, US Data May Help Counter Risk Aversion and Boost Commodities

Commodity prices are facing selling pressure to start the trading week asworries about the impact of Hurricane Sandy on US economic activity spark broad-based risk aversion. In an environment where traders continue to hope a pickup in the US will help offset sluggish performance in Europe and Asia, the possibility that Sandy produces a major dislocation represents a significant obstacle to risk appetite at large. Sentiment-anchored crude oil and copper prices are following shares lower. Silver is likewise under pressure but gold is managing to hold up, trading little-changed on the day thus far.

US Personal Income and Spending figures headline the economic calendar, with improvements expected on both fronts. A marginally stronger Dallas Fed Manufacturing Survey is likewise forecast. While such outcomes may have been expected to help countervail risk-off cues, their implications on a day when US financial markets have been forced closed is unclear. The preliminary set of October’s German CPI figures is another possible source for risk trends. The report is expected to show the annual inflation rate slowed to the weakest in three months, boosting hopes for ECB stimulus. That may help boost sentiment (and commodities by extension) considering the recession in the Eurozone represents the most significant headwind facing overall global growth.

WTI Crude Oil (NY Close): $86.28 // +0.23 // +0.27%

Prices are stalling above the 85.00 figure, a barrier reinforced by the 50%Fibonacci expansion at 83.76. Initial resistance lines up at 87.66, the 38.2% Fib, with a break above that targeting a falling trend line set from late September (now at 91.66). Alternatively, a break below 83.76 targets the 80.00 figure and 61.8% level at 79.84.

Commodities_US_German_Data_May_Help_Offset_Hurricane_Sandy_Jitters_body_Picture_3.png, Commodities: US, German Data May Help Offset Hurricane Sandy Jitters

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1711.30 // -0.80 // -0.05%

Prices put in a Bullish Engulfing candlestick pattern above support at 1693.06, the 38.2% Fibonacci retracement, hinting a bounce may be ahead. Initial resistance lines up at a falling trend line set from the October 5 swing high (1717.66). A break above that exposes the 1732.33-35.65 area, marked by a horizontal pivot level and the 23.6% Fib. Alternatively, a drop below support targets the 50% level at 1661.32.

Commodities_US_German_Data_May_Help_Offset_Hurricane_Sandy_Jitters_body_Picture_4.png, Commodities: US, German Data May Help Offset Hurricane Sandy Jitters

Daily Chart - Created Using FXCM Marketscope 2.0

Want to learn more about RSI? Watch this Video

Spot Silver (NY Close): $32.09 // -0.06 // -0.17%

Prices put in a bullish Morning Star candlestick pattern above support at 31.43, the 50% Fibonacci retracement, hinting a move higher is ahead. Resistance lines up at 32.36, the 38.2% level, with a break above that targeting the 33.51-66 area. Alternatively, drop below support exposes the 61.8% retracement at 30.50

Commodities_US_German_Data_May_Help_Offset_Hurricane_Sandy_Jitters_body_Picture_5.png, Commodities: US, German Data May Help Offset Hurricane Sandy Jitters

Daily Chart - Created Using FXCM Marketscope 2.0

Want to learn more about RSI? Watch this Video

COMEX E-Mini Copper (NY Close): $3.550 // 0.000 // 0.00%

Prices are stalling above support at 3.537, the 50%Fibonacci retracement. Resistance is at 3.608, the 38.2% level. A break above that targets the 23.6% retracement at 3.695. Alternatively, a drop below support exposes the 61.8% Fib at 3.466.

Commodities_US_German_Data_May_Help_Offset_Hurricane_Sandy_Jitters_body_Picture_6.png, Commodities: US, German Data May Help Offset Hurricane Sandy Jitters

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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