CN:Crude Oil and Gold to Fall on Waning Risk Appetite, Inflation Outlook
Commodities - Energy
Crude Oil Likely to Follow S&P 500 Lower
WTI Crude Oil (NY Close): $96.89 // +1.95 // +2.05%
The bulls appear to be losing a bit of momentum having overcome resistance at the $96.00 figure as renewed Euro Zone debt fears bear down on market-wide risk appetite in the wake of Moody's downgrade of Portuguese debt to junk status. S&P 500 stock index futures are trading considerably lower ahead of the opening bell on Wall Street, with dour sentiment likely bear down on the WTI contract as well. A slowdown in US service-sector growth in June - expected to be revealed as the ISM Non-Manufacturing Composite gauge crosses the wires at 14:00 GMT - would reinforce selling pressure. Preliminary weekly inventory figures from API are on tap as well. The $96.00 level has been recast as near-term support, with a break lower exposing $94.48.
Commodities - Metals
Gold Rebound May Falter on Soft Inflation Bets
Spot Gold (NY Close): 1515.65 // +18.57 // +1.24%
Inflation expectations have returned to the spotlight, with the steady slide in investors' bets on near-term price growth (as derived from 2-year Treasury bond yields) arguing for a broadly bearish outlook. With that in mind, forecasting day-to-day price action has proven decidedly difficult, and risk sentiment may overtake momentum at a moment's notice. At least for the time being however, these forces appear aligned to weigh on the yellow metal, with rekindled Euro Zone debt fears and weaker US service-sector growth threatening to sink stocks and push breakeven rates (the spread between regular and inflation-linked bond yields commonly used as a gauge of price growth expectations) lower, taking gold along for the ride.
Spot Silver (NY Close): $35.48 // +1.33 // +3.88%
As with gold, inflation expectations appears to be the top driver for silver prices, which points the way lower in the near term as the metal tests resistance at the top of a falling channel set from the May 26 swing high. Near-term support lines up at $34.72, with a break below that exposing $32.17.
