Talking Points
- Crude Oil, Copper to Follow Stocks Higher if US GDP Boosts QE3 Hopes
- Gold and Silver May Find Support on Renewed Store-of Value Demand
All eyes are on the second-quarter US Gross Domestic Product Expectations call for output growth to slow to an annualized pace of 1.4 percent from 1.9 percent recorded in the three months through March. The outcome is likely to be interpreted in the context of Fed stimulus expectations ahead of next week’s FOMC policy meeting. This means a soft print may be counter-intuitively interpreted as supportive for risk appetite in that it is perceived as increasing the chance of further accommodation. Indeed, S&P 500 stock index futures are trading firmly higher ahead of the report. Such an outcome opens the door for growth-geared crude oil and copper prices to follow shares while gold and silver find renewed support in inflation-hedge demand amid fears of US Dollar dilution.
WTI Crude Oil (NY Close): $89.39 // +0.42 // +0.47%
Prices are edging higher from support in the 87.65-88.32 area, marked by the July 3 closing high and the 14.6% Fibonacci expansion, to test the 90.00 figure. A break higher from here exposes the July 19 high at 93.21. Alternatively, a break lower exposes the 23.6% level at 85.37.
Daily Chart - Created Using FXCM Marketscope 2.0
Spot Gold (NY Close): $1615.77 // +11.32 // +0.71%
Prices are testing resistance in the 1615.65-35.70 area after taking out falling trend line resistance set from late March, with a break higher initially exposing 1671.49. The trend line, now squarely at the 1600/oz figure, has been recast as near-term support.
Daily Chart - Created Using FXCM Marketscope 2.0
Spot Silver (NY Close): $27.36 // +0.38 // +1.39%
Prices are testing above a falling trend line set from early March to challenge resistance at 27.68, with a break higher exposing the July 3 high at 28.44. Near-term support remains at 26.75, with a break below that exposing the major triple bottom at 26.05.
Daily Chart - Created Using FXCM Marketscope 2.0
COMEX E-Mini Copper (NY Close): $3.354 // -0.026 // -0.77%
Prices are pushing above resistance in the 3.378-90 area marked by the July 10 daily close and the 23.6% Fibonacci expansion to challenge the 14.6% level at 3.445. A break above that targets 3.535. Trend line support comes in at 3.336, with a push below that targeting the 38.2% Fib at 3.269.
Daily Chart - Created Using FXCM Marketscope 2.0
--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com
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