Talking Points

  • Crude Oil, Copper Aiming Higher as Risk Appetite Stages Cautious Recovery
  • Gold and Silver Find Support in Waning Safe Haven Demand for US Dollar

Commodity prices are edging higher as risk appetite cautiously recovers in early European trade. Sentiment-linked crude oil and copper prices are following stocks higher, while ebbing haven demand for the US Dollar is offering support to the anti-fiat gold and silver.

The chipper mood appears linked to optimism ahead of today's Irish national referendum on the fiscal compact treaty. Opinion polls indicate voters are likely to approve the measure. A no vote would still allow the inter-governmental pact to move forward but would mean Ireland is unable to tap the ESM bailout fund if sovereign stress returns, threatening regional stability.

On the economic data front, stronger-than-expected Swiss GDP as well as German Retail Salesand Unemploymentfigures are also helping to lift investors' spirits. An expected nine-month low on the Eurozone CPI print may also help in this regard, boosting hopes that easing price pressures will give the ECB space to expand stimulus efforts.

Looking ahead, S&P 500 stock index futures are pointing higher, hinting the recovery in risk appetite is likely to carry forward as Wall Street comes online. The ADP Employment Change reading, Chicago PMI figures and the weekly jobless claims report are on tap on the US economic data docket, with narrow improvements expected all around.

WTI Crude Oil (NY Close): $87.82 // -2.94 // -3.24%

Prices broke through support in the 90.14-88.54 region marked by the early September swing top and the 61.8% Fibonacci retracement. Sellers now aim to challenge the 76.4% level at 83.34. The 90.14-88.54 area has been recast as near-term resistance.

Crude_Oil_Gold_Rise_as_Risk_Appetite_Stages_Cautious_Recovery_body_Picture_3.png,

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1563.38 // +8.22 // +0.53%

Prices continue to consolidate above support in the 1522.50-1532.45 area. Near-term trend line support-turned-resistance lines up at 1586.09. A break above this boundary exposes the 1600/oz figure followed by the top of a channel set from late February, now at 1614.45.

Crude_Oil_Gold_Rise_as_Risk_Appetite_Stages_Cautious_Recovery_body_Picture_4.png,

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Silver (NY Close): $27.90 // +0.04 // +0.15%

Prices are drifting sideways above support at 27.06, with gains still capped at 28.70. A break lower initially exposes the 26.05-15 area. Alternatively, a push higher through resistance opens the door for a challenge of 29.71.

Crude_Oil_Gold_Rise_as_Risk_Appetite_Stages_Cautious_Recovery_body_Picture_5.png,

Daily Chart - Created Using FXCM Marketscope 2.0

COMEX E-Mini Copper (NY Close): $3.390 // -0.072 // -2.08%

Prices broke through support at 3.435, the 23.6%Fibonacci expansion, with sellers now testing the 38.2% level at 3.373. A break below this boundary exposes the 50% Fib 3.323. The 3.435 level has been recast as resistance.

Crude_Oil_Gold_Rise_as_Risk_Appetite_Stages_Cautious_Recovery_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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