Crude Oil Tests Levels Below $80

Crude Oil (WTI) - $80.12 // -$0.13 // -0.16%

 

Commentary: As has been the pattern in recent sessions, crude oil followed the movements in equity markets, declining sharply in the early morning, and then recovering after the Fed policy decision and statement were released. Crude oil declined as much as $2.28 to $79.20, but settled the day $1.23, or 1.51% lower. As we have stated in the past, it will be difficult for crude oil to break above the 11-month resistance area in the mid-$80’s in the near-term, given the abundant supply picture. Up next, traders will be looking to the DOE inventory report on Wednesday for guidance. As U.S. inventories are already at 10-year highs, a bearish report would likely weigh on the commodity.

 

Technical Outlook: Prices are testing support at $79.38 having been rejected at resistance below $82.55, the 138.2% Fibonacci extension of the 6/28-7/6 downswing. Support is reinforced by the close proximity of the bottom of a rising channel set from the low in May, now at $77.94. A break below that exposes the congestion region around the $75.00 figure.

Gold Looks to the US Dollar

 

Gold - $1203.55 // -$0.70 // -0.06%

 

Commentary: Gold again took its cues from the US Dollar in Tuesday’s session. Prices got as low as $1190.77 in the morning, but proceeded to finish higher by $2.90, or 0.24%, following the Fed announcement and subsequent dollar decline. Gold ETF holdings remain remarkably stable and about 1.2 million troy ounces below the record highs of mid-July. With Euro-area sovereign debt concerns seemingly in the rear-view mirror, expect gold to continue to move inversely to the US Dollar for now.

Technical Outlook: Prices remain wedged between the broken top of a falling channel set from the swing high in June (now acting as support) at $1188.80 and horizontal resistance at $1215.47. A move above that barrier will open the door for a challenge of the record high at $1265.30.

 

Silver - $18.30 // -$0.03 // -0.16%

 

Commentary: Silver staged a remarkable comeback on Tuesday, rebounding $0.38 off session lows. The metal settled $0.01, or 0.05% lower on the day. The gold/silver ratio ticked slightly higher to 65.77, but remains well within the 2010 range of 60 to 71.

 

Technical Outlook: Unchanged from yesterday: “Prices have stalled at resistance marked by the upper boundary of a descending triangle chart formation above support at $17.45 that has contained prices for much of the year (now at $18.51). A break below initial support at $18.17 opens the door for a move to test the $18.00 figure and another run toward $17.45. Alternatively, renewed bullish momentum would expose the $19.00 mark.”