Talking Points

  • Crude Oil, Copper Rise as Risk Appetite Firms on European GDP Data
  • Gold and Silver Find Support in Ebbing Haven Demand for the US Dollar

Commodity prices are on the upswing as market-wide risk appetite finds support after marginally stronger than expected French and German second-quarter GDP figures. The region-wide GDP print registered in line with forecasts. Growth-linked crude oil and copper prices are following shares higher while gold and silver are seeing a de-facto boost as fading haven demand weighs on the US Dollar.

From here, the spotlight shifts to July's US Retail Sales report. The reading will help establish the degree of follow-through on the stronger-than-expected jobs growth figures published earlier this month. Economists' forecasts suggest receipts will add 0.3 percent, marking the strongest reading in four months.

As we discussed in our weekly fundamental briefing, the markets are likely to take this week's economic data flow at face value, interpreting results in terms of their implications for growth rather than stimulus expectations. That means a firmer Retail Sales number stands to reinforce the emerging risk-on environment. Indeed, S&P 500 stock index futures are pointing meaningfully higher in European hours, hinting commodities are likely to remain well-supported as Wall Street comes online.

WTI Crude Oil (NY Close): $92.73 // -0.14 // -0.15%

Prices continue to test resistance in the 93.21-90 area marked by the July 19 high and the 50% Fibonacci retracement. Near-term support remains at the psychologically significant 90.00 figure, a barrier is reinforced by the 38.2% retracement at 89.87. A break below the latter level exposes a rising trend line set from early July, now at 88.63. Alternatively, a push above resistance initially targets the 61.8% Fib at 97.82.

"Crude_Oil_Gold_Rise_as_European_GDP_Data_Fuels_Risk_Appetite_body_Picture_3.png,

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1609.75 // -10.45 // -0.64%

Prices continue to drift below resistance in the 1620.45-35.70 congestion area. Near-term support remains at a rising trend line support set from late June, now at 1594.59. A break below this boundary exposes a longer-term trend line established from the May 16 bottom, currently at 1575.20. Alternatively, a push above resistance initially targets 1677.79, the May 1 swing high.

"Crude_Oil_Gold_Rise_as_European_GDP_Data_Fuels_Risk_Appetite_body_Picture_4.png,

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Silver (NY Close): $27.81 // -0.32 // -1.12%

Prices continue to tread water after taking out resistance at 27.68. Near-term resistance lines up at 28.44, with a break above that exposing 29.42. Alternatively, a reversal back through support targets a rising trend line at 27.24 and the May 16 low at 26.75.

"Crude_Oil_Gold_Rise_as_European_GDP_Data_Fuels_Risk_Appetite_body_Picture_5.png,

Daily Chart - Created Using FXCM Marketscope 2.0

COMEX E-Mini Copper (NY Close): $3.354 // -0.038 // -1.12%

Prices broke through support at 3.387 after recoiling from resistance at a falling trend line set from the April 3 high. Sellers now aim to challenge triple bottom support at 3.300. The 3.387 level has been recast as near-term resistance, with a break above that targeting 3.435.

"Crude_Oil_Gold_Rise_as_European_GDP_Data_Fuels_Risk_Appetite_body_Picture_6.png,

Daily Chart - Created Using FXCM Marketscope 2.0

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

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