Commodities – Energy

Crude Oil May Extend Losses on Fading Risk Appetite

Crude Oil (WTI)       $81.03 -$0.84 -1.03%
Prices have pulled back from resistance at $82.23 to find support above the previously broken upper boundary of a Rising Wedge formation (now at $81.26). The US economic calendar is fairly light once again, with only the Department of Energy set to release their short-term crude outlook figures while the American Petroleum Institute publishes weekly inventory data. On balance, risk sentiment may prove to be the guiding catalyst once again. Indeed, the percent-change correlation between the price of the WTI contract and the MSCI World Stock Index remains elevated at 0.76. European shares are trading lower and US index futures are firmly in negative territory, making such an outcome supportive of a bearish scenario. A break below current support will expose the $80 figure.

Commodities – Metals

Gold, Silver to Decline on Firming US Yields Outlook

Gold $1120.08 -$3.48 -0.31%
Gold turned lower from support-turned-resistance at a rising trend line established from the swing bottom in early February, finding support at $1118.60. The outlook for US interest rates appears to have taken over as the primary near-term catalyst. Indeed, the 20-day correlation of gold with the spread between the yields on 12-month and 1-month Treasury notes now stands at -0.60, suggesting continued selling is ahead of the market’s perception of the Fed continues to adjust toward a more hawkish posture than previously expected. A push below current support exposes the $1100.00 figure.

Silver $17.09 -$0.16 -0.90%
As with gold, US interest rate expectations appear to be the primary driver of price action in the near term. Indeed, the silver’s inverse correlation with the spread between 12-month and 1-month Treasury yields stands at -0.69, a reading even higher than the precious metal’s more expensive counterpart. Technically, a Bearish Engulfing candlestick formation below resistance at a rising trend line connecting major swing highs from early February has marked the beginning of a move lower, with a break of initial support at $16.80 exposing the $16.00 figure.

Gold’s Pool-Position is 34% Long, meaning that most Finotec clients are selling the precious metal.

Gold fell in Europe on Monday as the market's failure to hold key psychological support just above $1,130 an ounce disappointed investors, prompting further selling of the precious metal. "(Gold) has been threatening this since the end of last week," said Simon Weeks, head of precious metals at the Bank of Nova Scotia."It ran out of steam on currencies, and in a thin market with bullish comments about growth around, gold is feeling a bit heavy. I expect it to come back to the 100 day moving average around $1,112." The precious metal rose in earlier trade after last week's above-forecast U.S. jobs data boosted hopes for an economic recovery and increased investors' willingness to take on risk. Gold is trading at $1,121 as of 21:10pm, GMT, with a bearish trend. Gold’s Pool-Position is 34% Long, meaning that most Finotec clients are selling the precious metal.

Crude’s Pool-position is 35% Long, meaning that most Finotec clients are selling the commodity.

Crude oil steadied along with equities as energy traders looked to stocks for signals of the strength of an economic recovery and fuel demand. Prices will probably fall to $60 a barrel during the fourth quarter of the year, Adam Sieminski, the chief energy economist at Deutsche Bank AG in Washington, said on Bloomberg Television. “The second half of the year could be weak because inventories are high, demand is still relatively weak, there’s plenty of supply and lots of OPEC spare capacity.” Crude Oil is trading at $81.70 as of 21:17pm, GMT, with a bearish trend. Crude’s Pool-position is 35% Long, meaning that most Finotec clients are selling the commodity.