Crude reversed back lower from resistance at $99.22, the 38.2% Fibonacci retracement of the drop from the early May swing high, taking out support at $96.38 and challenging $94.51 anew. Prices remain broadly anchored to stock performance, with S&P 500 stock index futures pointing higher and arguing for in favor an upside scenario into the week-end as the Wall Street opening bell approaches. With that in mind, the landscape is fraught with uncertainty as European Banking Authority (EBA) prepares to unveil the results EU bank stress tests meant to reassure investors that the region's lenders are sufficiently capitalized and could withstand severe sovereign stress within the region. Worries about the methodology of the tests are rampant after a similar exercise last year drew heavy criticism for being too lax while a Reuters report citing unnamed central bank sources raised doubts transparency of the current experiment. Early expectations suggest that 10-15 banks are likely to fail the tests, and this is likely to be the benchmark for the markets' reaction to the final outcome. On the data front, US Consumer Price Index and Industrial Production readings as well as the University of Michigan Consumer Confidence gauge are on tap. Marginally stronger readings are expected, which may counter-intuitively serve to weigh on risk appetite bydiminishing the likelihood of a QE3 program from the Federal Reserve. Spot Gold (NY Close): 1587.30 // +4.93 // +0.31% The correlation between gold and the 2-year breakeven rate - a measure of investors' priced-in inflation expectations derived from bond yields - hit the highest in three months yesterday. Needless to say, this took the wind out the metals sails a bit yesterday as Fed Chairman Ben Bernanke deflated QE3 hopes , sapping the perceived need for a hedge against runaway price growth. Prices stalled ahead of resistance at $1588.29 - the 138.2% Fibonacci extension level - setting a new record high just below the $1600 figure. All eyes are now on the US economic data set, with a validation of expectations calling for broad-based (albeit modest) improvements in industrial production and consumer confidence against a backdrop of still very low core inflation threatening to weigh further on QE3 bets and gold alike. With that in mind, the implications of the EU stress tests and continued deadlock on raising the US debt ceiling for the Dollar remain important and somewhat unpredictable considerations given gold is priced against the greenback on the global markets. As with gold, the focus remains on inflation expectations, with silver traders sizing up US CPI, Industrial Production and UofM Consumer Confidence figures in terms of their implications for the likelihood of a QE3 program. Prices put in a bearish Shooting Star candlestick below resistance at $38.99 - the 38.2% Fibonacci retracement of the drop from April's swing high - hinting a pullback is ahead. Near-term support stands at $36.84, the July 8 session high.

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