The Commodity Report: Precious Metals and Energies

Tuesday's session focused on the events taking place in the EuroZone.

Precious metals rallied in mid-morning trade to their respective highs at 1804.40 and 35.35. Both precious metals finished just shy of those marks.

Gold futures ended higher by 0.4% at 1799.20 oz, and Silver finished + 0.9% at 35.15oz. In after hours trade both metals sold off into negative territory following headlines that Italian Prime Minister Silvio Berlusconi will resign after the approval of the new budget law. It seem as thought a bit clarity as to what may happen in Italy is taking some of the risk premium out of the markets.

Crude Oil settled higher by 1.3% at 96.80 bbl, rallied in the last hour of trade following Mr. Berlusconi resignation news. Futures ended just short of highs at 98.89. Crude Oil futures shook off the IAEA report, which indicated that Iran carried out work relevant for developing nuclear arms.

Gold Market Recap

The Gold market showed initial strength and stayed positive throughout most of the trading session Tuesday. A weaker USD did not seem to matter for the trade today, which was focused on the situation in Italy and to a lesser degree to the events in Greece.

With the incoming Power block in Italy not seen as a definitively positive development, the Italian situation continued to favor the safe haven crowd. In other words, Tuesday's confidence vote in Italy was not seen as a Global financial market confidence building event.

Silver Market Recap

The Silver market was driven higher by the strength in Gold prices Tuesday as Gold was moving higher off fears of a return to a Global liquidity crisis.

In fact, BOC officials hinted that the World was once again threatened with another liquidity trap in the wake of the events in Europe.

With Dec Silver prices Tuesday is still under the late Oct lows, so there is no suggestion that Silver has become expensive off the most recent revival of contagion fears.

Note: Gold futures ended higher by 0.4% at 1799.20 oz, and Silver finished + 0.9% at 35.15oz. both traded lower after the close of pit trade.

Energy Market Recap

Dec Crude Oil put up another positive performance, registering its highest close since July 29th Tuesday.

Early gains in Crude Oil came from a return in risk-taking sentiment, higher Global equity markets and some weakness in the USD.

Prices backed off their best morning marks into the mid-session as concerns over the fate of the Italian government came into focus.

This pressured risk-markets in general and brought Crude Oil prices lower too.

The Italian situation turned positive in early afternoon trade on reports that Prime Minister Berlusconi indicated that he would resign under some predetermined conditions.

Some traders also pointed to the release of the UN's IAEA nuclear report indicating Iran's development of atomic bonds as another factor providing a lift to the Crude Oil market. While it is unclear what the ramifications might be, it serves to boost the geo-political risk in the market.

Crude Oil settled higher by 1.3% at 96.80 bbl, rallied in the last hour of trade, futures ended just short of highs at 98.89.

Paul A. Ebeling, Jnr.

Paul A. Ebeling, Jnr

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.