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Crude Oil Rallies to Top End of Range, Gold Rises on Investment Demand

Crude Oil Rallies to Top End of Range

Crude Oil (WTI) - $89.71 // $0.90 // 1.01%

Commentary: Crude rallied to the upper end of its recent consolidation range as the January contract rolled off the board. Oil settled $0.79, or 0.9%, higher at $88.81. Prices got another $0.60 boost on the roll with WTI now trading just under $90. Will the $90 resistance break this time around? It’s impossible to be sure in the short-term, but over the medium-term, prices will likely be much higher.

Volume should begin to really evaporate as we work our way through this week given the coming holidays. This week is shortened in observance of Christmas while next week is shortened in observance of New Years. Notable economic releases still to come include U.S. Existing Home Sales, Durable Goods Orders, and figures on Personal Spending and Income. Then there is the usual weekly report on U.S. petroleum inventories set to be released on Wednesday.

Technical Outlook: Prices continue toconsolidate between $87.24 and $89.67, the 38.2% and 14.6% Fibonacci retracements of the 11/17-12/7 upswing, respectively. A break below current support exposes the 50% Fib at $86.03. Alternatively, a push higher targets December’s swing high at $91.17.

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Commodities – Metals

Gold Rises on Investment Demand

Gold - $1387.35 // $2.10 // 0.15%

Commentary: Gold added $9.80, or 0.71%, to settle at $1385.25 as gold ETF holdings inched further into record territory, now just shy of 68 million troy ounces. Clearly the 100 basis point move higher in long-term U.S. Treasury yields has had no impact on investor interest in gold. Indeed, it may have bolstered speculative demand in some perverse way given that higher yields are often associated with inflation.

While gold prices have been rather muted in recent sessions, they are only about 3% off the all-time highs set earlier this month. Moreover, prices are up 23.7% year-to-date, with records shattering on a weekly basis. A bit of consolidation is to be expected.

Technical Outlook: Prices have taken out resistance at $1380.47, the 50% Fibonacci retracement of the 11/16-12/7 rally, having found support at the 61.8% level ($1368.49). From here, the bulls are aiming for a retest of the rising trend line set from mid-November, now at $1397.04. The 50% Fib has been recast as near-term support.

Silver - $29.36 // $0.01 // 0.04%

Commentary: Silver added $0.20, or 0.68%, to settle at $29.35 on Monday. ETF holdings fell about 300,000 troy ounces from the recent record level to stand at 484.6 million .

The gold/silver ratio inched higher to 47.3,but stands near the lowest levels since February 2007. (The gold/silver ratio measures the relative performance of the two precious metals. A higher ratio indicates gold outperformance, while a lower ratio indicates silver outperformance).

Technical Outlook: Prices remain wedged between a rising trend line set from late October, now at $28.95, and the 14.6%Fibonacci retracement of the 10/22-12/07 rallyat $29.55. A break above near term resistance exposes the latest swing high at $30.70. Alternatively, a reversal through the trend line (reinforced by the 23.6% Fib at $28.85) targets the 38.2% level at $27.70.

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