Strong Chinese growth figures and supply worries following a pipeline leak are supporting crude oil. Gold is displaying notable relative strength in the face of increasing risk appetite. Commodities – Energy Crude Oil Boosted by Chinese Growth Crude Oil (WTI) - $77.22 // $0.74 // 0.97% Commentary: Crude oil is up $0.74, or 0.97%, in overnight trade, as traders grow more optimistic about the outlook for global growth. Chinese economic data released late last week showed stronger-than-expected performance in industrial production and retail sales. Also supporting crude oil prices is concern surrounding supply after an Enbridge pipeline carrying oil from Canada to the Midwest was shut down last week following a leak. The pipeline has capacity of 670,000 barrels per day, which is certainly significant, but the extent of supply disruption is unknown and likely much less than that figure, as often times output can be diverted to other pipelines that have excess capacity. Nevertheless, the combined China-pipeline news flow has allowed crude oil to play a bit of catch up with other risk assets after having underperformed for the last couple of weeks. Technical Outlook: Prices took out resistance at $75.59, with the bulls now re-testing the bottom of a rising channel set from late May. A break above this boundary (now at $77.03) exposes the next layer of resistance at the $79.38 level. Gold Resilient in the Face of Rising Risk Appetite Gold - $1245.85 // $0.40 // 0.03% Commentary: Gold has been remarkably resilient over the past two weeks considering the notable rise in risk appetite and equity prices. Even last week, gold was flat week-over-week despite an $11 drop on Thursday. The metal is quiet in overnight trade with prices best described as being in a consolidation pattern. The question for traders is whether gold is in the process of putting in a double top or getting ready to break out toward $1300. Even considering gold’s relative strength, we find it unlikely that the metal will be able to breakout to new all-time highs in the event equity markets continue to rally. On the other hand, if global growth concerns were to resume, an upside breakout would become much more likely. Technical Outlook: As we suspected last week, the emergence of negative RSI divergence preceded a bearish reversal, with prices taking out support at the bottom of a rising channel established from the July low to pause at the $1243.27 level. Continued selling from here exposes $1215.47, while resistance remains at the $1265.30 record high. Longer term, gold positioning reveals bearish cues, hinting that a major top may be taking shape. Confirmation of a downward reversal in line with our fundamental outlook requires a weekly close below a rising trend line set from the swing bottom in late 2008, now at $1208.59. Silver - $19.90 // $0.02 // 0.08% Commentary: Silver is nearly unchanged, as the metal takes it cues from gold. The gold/silver ratio is holding at relatively low levels under 63. Though unlikely, we will be watching to see whether silver can put in another period of strong outperformance versus gold, sending the ratio even lower. Technical Outlook: Prices continue to stall at the $20.00 figure after taking out resistance at the mid-May swing high ($19.83). Renewed selling initially targeting support in the $19.28-$19.47 region.

Source