Commentary: Crude oil soared $2.74, or 3.58% on Thursday, as strong corporate earnings announcements and better-than-expected existing home sales figures encouraged bullish bets. Since putting in its lows back in May, crude oil has advanced over 23%. The commodity is now less concerned about the potential for more slowing in the global economy, and more concerned with the upside risks to demand from emerging markets and the downside risks to supply from the Gulf of Mexico turmoil. There is a consensus forming among long-term forecasters that oil has a good chance to revisit triple digit levels sometime next year, as surging demand from developing economies collides with weak non-OPEC supply growth.
Technical Outlook: Prices closed above the 6/28 highs, confirming the trend of higher highs and higher lows. Look for crude oil to continue toward the top of the channel over $81.00. On the downside, the top of the congestion range near $77.50 is support.
Commentary: Gold continued its recent pattern of seesawing back and forth, as the metal rebounded $9.90, or 0.84% on Thursday. Gold ETF holdings fell substantially once again, bringing the total decline over three days to over 400,000 troy ounces. Interestingly, the recent ETF liquidation has had little impact on gold. History suggests that such fluctuations in ETF holdings does not necessary translate into gold price declines in the short-term, however, over longer periods, the correlation between holdings and price is extremely high.
Technical Outlook: Prices are trying work their way off a trendline that extends back to February. Renewed selling would take gold back toward $1185, while a break of the trendline would expose horizontal support near $1170. On the upside, the top of the recent congestion range near $1215 poses resistance.
Silver $18.16 +$0.06 +0.33%
Commentary: Silver moved swiftly higher on Thursday, gaining $0.45, or 2.55% in the session. Directionally, silver took its cues from gold as is typical, but the metal has been outperforming gold in recent sessions. At 66, the gold/silver ratio is at the low end of the recent range. The month of May was the last time the ratio was lower, while the low for the year is near 61, which was in January.
Technical Outlook: Prices bounced off key horizontal support near $17.50, and are now approaching the recent high of $18.51, which also coincides with the downward trendline. Silver looks to be establishing a descending triangle formation, which many technical traders consider a bearish continuation pattern. Nevertheless, silver will likely take its directional cues from gold rather than any technical pattern specific to it.
