Commodities – Energy 

Crude Oil Remains Near Two-Year Highs 

Crude Oil (WTI) - $89.41 // $0.30 // 0.34% 

Commentary: Crude oil is up modestly to kick off the new week, with WTI just above $89 and Brent sitting near 27-month highs at $98. We continue to see most light, sweet crude oil benchmarks fluctuate just under $100 as inventories draw down and markets digest the 3mmbbl/d+ demand growth from the second half of 2010. Clearly, that pace of growth has to slowdown before we can see a pause in prices. 

Economic data for today consists of manufacturing and services PMI from France, Germany, and the Euro-Zone broadly. 

Technical Outlook: Prices found interim support above the $88.00 figure, rebounding to retest support-turned-resistance at the bottom of a bearish Rising Wedge chart formation carved out from early November (now at $90.36). The nascent downtrend now looks set to resume, with a break below the $87.33-$88.00 region initially exposing $86.32.


Commodities – Metals

Gold Tries to Regain its Footing 

Gold - $1351.25 // $8.57 // 0.64%

Commentary: Gold tumbled through some key technical support last week as prices began to catch up to a notable decline in ETF holdings. This downtrend may continue as investors and traders continue to lock in the significant gains from last year, but keep in mind that in the bigger picture, gold remains well-bid and in a bull market. Indeed, on Friday there was a huge 600,000 troy ounce increase in ETF holdings, which erased one third of the prior decline, reinforcing that there is a lot of capital looking to enter the metal on any meaningful correction in prices.

Technical Outlook: Prices found interim support at a downward-sloping internal trend line after taking out a rising trend line set from late October. A corrective upswing from here targets $1361.39, while trend line support now stands at $1335.34.


Silver - $27.89 // $0.39 // 1.40%

Commentary: Silver is starting the week with gains, but ETF holdings of the metal did not see the same surge that we saw in gold holdings. At 473.5 million troy ounces, silver ETF holdings are at the lowest level since early-November.

The gold/silver ratio fell to 48.4, but remains above the four-year low near 46 set late last year. (The gold/silver ratio measures the relative value/performance of the two precious metals. A higher ratio indicates gold outperformance, while a lower ratio indicates silver outperformance)

Technical Outlook: As with gold, prices have found interim support at an internal trend line and started to correct higher toward the $28.19, a level now recast as resistance. Trend line support now stands at $27.21.