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Weekly Commodity Outlook

January 17th, 2011 Posted in Daily Forex News, Oil and Precious Metals Bookmark and Share

Spot crude oil prices could build on last week’s gains while silver is testing a key support level.

Crude Oil

Last week spot crude oil was on the rise, moving higher to $91.41 from $84.40. Strong US data releases gave traders a reason to bid the price higher. Evidence of a US economy that is picking up speed is supportive of spot crude oil buying. Friday’s strong industrial production numbers highlight this environment. Wednesday’s larger than expected drawdown in weekly crude oil inventories also spurred strong bids.
Adding to the environment was a weaker dollar as the greenback was down 3.7% for the week versus the euro.

Crude oil buying could continue this week with near term targets the high of 2011 at $92.56. Support is located at $87.25.

Gold

Spot gold continues to range trade, an environment that has prevailed since mid-October. Chatter continues in the media to support the rise in the price of gold. However, last week’s talk of inflationary pressures in Europe by ECB President Jean-Claude Trichet may have begun to set in place future assumptions of rising global interest rates. While a rate hike in the US seems unlikely until the end of the year or early 2012, any talk of higher interest rates would be seen as a negative for gold bulls.

Gold prices are currently supported by a rising trend line that begins in mid-October, followed by the support line at $1,315.

Silver

Silver appears to be on the verge of a selling opportunity. After making a new high at $31.21, the commodity has breached below its rising trend line from late August. The price then moved higher where the previous trend line acted as a resistance level in text book fashion. Since then further losses have been booked and the price is now testing the $28 support level. A breach below this support line would set the stage for a reversal in the price of the commodity to the $26.00 level where the $38.2% Fibonacci retracement level is located from the August to January trend.

Platinum

This past week had platinum at a new high of $1,830 and future gains appear to be in store. A lack of divergence on the daily chart’s slow stochastic oscillator supports further price increases for the commodity. Traders should be long on platinum with support at $1787 and $1,756.

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