Talking Points

  • ¬†Crude Oil, Copper Aim Higher as US GDP Pickup Promises Demand Growth
  • ¬†Gold, Silver to Rise as Stronger US Growth Boosts Inflation Expectations

WTI Crude Oil (NY Close): $99.70 // +0.30 // +0.30%

The spotlight has turned to the fourth-quarter US GDP figures into the week-end. Output is expected to expand at an annualized rate of 3 percent in the fourth quarter, marking the best performance since the three months through June 2010. Broadly speaking, a pickup in growth bodes well for the WTI contract in terms of an improved demand outlook, although crude's relatively mute price action over recent session casts doubt on the outcome's market-moving potential.

On the technical front, positioning is broadly unchanged from yesterday. Prices continue to consolidate above support at 97.70, with the first layer of resistance still at 101.28. A break lower exposes resistance-turned-support at the top of a falling channel set from mid-November, now at 96.37. Alternatively, a push higher initially targets the mid-November high at 103.35.

Crude_Oil_Gold_Aim_Higher_on_Accelerating_US_Economic_Growth_body_Picture_3.png,

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1720.65 // +10.08 // +0.59%

As with crude, gold prices are looking to the US GDP report for direction cues. A pickup in output growth unchecked by the Fed after policymakers clearly lurched to the dovish side of the policy spectrum earlier this week promises to boost inflation expectations, boosting demand for the yellow metal as a store-of-value hedge. Needless to say, a disappointing outcome would reverse this dynamic, weighing on prices. In fact, given gold's already considerable advance over the last two days, a print squarely in line with expectations may also produce a bit of corrective downside amid profit-taking.

Sizing up the chart setup, pricescontinue to move higher after taking out horizontal resistance at 1677.05 as well as a falling trend line established from early September, with the bulls still aiming to challenge 1750.87. Near-term support stands at the $1700/oz figure, a psychological threshold reinforced by former resistance at the top of a minor channel set from early January.

Crude_Oil_Gold_Aim_Higher_on_Accelerating_US_Economic_Growth_body_Picture_4.png,

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Silver (NY Close): $33.47 // +0.29 // +0.87%

Like gold, silver is looking to the US GDP report and the outcome's implications for inflation expectations as the main driver of price action into the week-end. Prices continue to work their way higher through congested support-turned-resistance levels, with a break past 33.30 exposing 34.03 as the next barrier and ultimately threatening the late October top at 35.30. The 33.30 mark has been recast as support.

Crude_Oil_Gold_Aim_Higher_on_Accelerating_US_Economic_Growth_body_Picture_5.png,

Daily Chart - Created Using FXCM Marketscope 2.0

COMEX E-Mini Copper (NY Close): $3.902 // +0.072 // +1.88%

Copper prices continue to show a strong relationship with broad-based risk appetite trends, hinting the cycle-sensitive metal is likely to advance as US GDP accelerates while the Fed stands aside. Prices took out resistance at 3.875, exposing the 4.000 figure. A break above this boundary exposes the late-August top at 4.170.

Crude_Oil_Gold_Aim_Higher_on_Accelerating_US_Economic_Growth_body_Picture_6.png,

Daily Chart - Created Using FXCM Marketscope 2.0

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com