Commodity prices continue to look toward US event risk for direction cues as traders weigh the ability of a cautious pickup in North America to offset sluggish performance in Europe and Asia. On the economic data front, the focus is on the Richmond Fed manufacturing activity gauge. Expectations call for an improvement in October, hinting the positive cues seen in September’s releases are carrying forward. Turning to the earnings docket, cycle-sensitive names with a global footprint including United Parcel Service, E.I. du Pont de Nemours and Ryder System are in focus as markets continue to fine-tune their global growth outlook.
On balance, a risk-supportive mix of releases stands to boost gold and silver, where pricescontinue to track broad-based sentiment trends (reflected in a significant correlation with the S&P 500). Copper prices are likewise positioned to take advantage of such a scenario as correlation studies suggest the influence of risk appetite is reasserting itself. Needless to say, disappointing results on the data and/or earnings sides of the equation stand to produce the opposite results.
Crude oil continues to stand aside from the broader risk-on/risk-off dynamic guiding many benchmark assets across the financial markets. With that in mind, the weekly set of inventory figures from API may prove more significant. The monthly trend has pointed to a steady build in crude stockpiles since mid-August. A reinforcement of this dynamic may apply pressure to the WTI contract as prices approach technical support (see below) and may force a breakout. Alternatively, a meaningful drop may offer a lifeline after two days of aggressive selling.
Comex E-Mini Copper (NY Close): $3.622 // -0.016 // -0.44%
Prices broke support at 3.695, the 23.6% Fibonacci retracement, exposing the 38.2% level at 3.608. A Spinning Top candle warns of indecision and hints a bounce may be ahead. The 3.695 level has been recast as resistance, with a push back above that exposing a falling trend line set from the September 14 high (now at 3.755). Alternatively, a break below support targets the 50% level at 3.537.
WTI Crude Oil (NY Close): $88.65 // -1.79 // -1.98%
Prices continue to consolidate above support at 87.66, the 38.2% Fibonacci expansion. Resistance is at 92.25, marked by a falling trend line established from late September, with a break above that targeting a larger downward-sloping barrier set from the February top, now at 97.90. Alternatively, a drop through support exposes the 50% level at 83.76.
.....Gold & Silver on page 2 HERE