he precious metals gold and silver prices could possibly rise despite expectations following US inflation hitting a six-month high in October which augmented the demand for precious metals as a hedge against price growth.

Points for Discussion

• Gold and Silver Increase as US CPI Puts Inflation at 6-Month High
• Crude Oil, Copper Target on a Higher Trend But Risk Still Remain
The two precious metals; Gold and Silver have been reconstructed from correlations with a near-term US inflation anticipation represented by “breakeven rates” (the difference between yields on nominal and inflation-adjusted US Treasury bonds). This indicated the probable outlook for price growth having-re-entered the spotlight, placing the US CPI data in focus over the upcoming hours. Expectations propose that the year-on-year inflation rate hit a 6-month high of 2.1 per cent in the previous month which further increased demand for previous metals despite US Dollar dilution fears.

For now, crude oil and copper still remain anchored to broad-based risk sentiment trends which were wired by firm connections with the S&P 500. Futures monitoring the benchmark stock index are moving higher in the overnight trade, hinting a dominance of risk-on mood moving into the opening bell on Wall Street. Follow-up may prove to be more of a hassle however as regional manufacturing activity measures from NY and Philadelphia Federal Reserve branches edged much lower this month that cautioned the pickup in US performance noted since mid-year may be bringing up the rear.

WTI Crude Oil (NY Close)
Prices still continue to hover above the 50 % Fibonacci expansion at 83.76 which was regarded as a break that depicted 80.00 figures and the 61.8 % level at 7978. Conflict is seen at 86.95, marked by a declining trend since September’s high and was reinforced by the 38.2 % FIB 87.66. A boost above that targets the 90.00 figure and the 23.6 % expansion at 92.53.

Prices edged above struggles at the 32.36 level, the 38.2 % Fibonacci retracement, exposing the 33.51-66 area marked by the 23.6 % level and a former range bottom as the potential upside goal. The 32.36 level has been recast as support with a drop back down the target level of 38.2 FIB at 31.43.

A Glimpse at COMEX E-Mini Copper (NY Close)
Prices are testing support at a rising trend line set from last year’s October 2011 (3.402). A break downward that initially aims at horizontal support at 3.300. Near term struggling is at the 3.505 level, the 23.6 % Fibonacci retracing with a solid hit above the 38.3 % level at 3.568.

Last Updated: November 20th, 2012