Holding Pattern for Metals, Financials
Gold – June Gold is trading lower this morning on a rosier outlook for the U.S. Dollar. Tomorrow's FOMC policy statement is expected to be hawkish in nature due to the rising costs of food and energy, which should bolster the greenback. The weakness in the currency is the primary reason for the exponential rise in energy prices over the past year and a half, and the Fed has come under political pressure to stem the tide. Trading figures to be fairly light until the statement is released tomorrow afternoon, and the language of the report will likely be the focus of traders more than the actual rate decision. Any hints at future rate cuts can be seen as bullish for the Gold market. The June Gold chart shows that the market may be vulnerable to selling pressure, as we trade near major support at 880. Furthermore, the contract failed to get any traction from the spinning top pattern, suggesting further weakness. A positive technical development is the bullish divergence between momentum and RSI, which hints at recovery. Support comes in at 890.20, 884.80 and 880.90, while resistance can be found at 899.50, 903.40 and 908.70.
S&P – Stock index futures are slightly lower in overnight trading, dragged down by disappointing earnings from Visa. The company – which had the largest IPO on record – reported a 28 percent increase in profits over last year, but missed the almost unattainable earnings expectations of many. Today's consumer confidence and tomorrow's GDP figures will give traders a better grip on economic conditions, but trading will probably be light prior to the FOMC decision. The consumer confidence figure is expected to drop to 61.0, its lowest level in 14 years. The June e-mini S&P chart remains bullish near term, but the market is in for a test as we approach major resistance in the 1390-1400 area. Solid advances beyond the 1400 mark may signal a larger recover for the market, while a rejection suggests sideways-to-lower action for the market. Support comes in at 1392.50, 1387.25 and 1381.00, while resistance can be found at 1403.75, 1309.75 and 1415.00.
Corn – Corn futures continue to charge forward due to slower-than-expected planting progress. Only 10 percent of this year's crop has made it into the ground so far, well below the 35 percent average. Yesterday's USDA report slashed the acreage figure to 86 million acres from the prior estimate of 90 million acres. With acreage expected to come in much lower than last year, it is imperative that farmers get as much of the crop planted as early as possible to stay above the trendline yield. The December Corn chart remains bullish, spiking to open higher on the overnight session and making new contract highs. One technical damper is the bearish divergence between momentum and RSI, suggesting that the trend may begin to weaken. Support comes in at 618.50, 606.25 and 599.75, while resistance can be found at 637.25, 643.75 and 656.00.
Rob Kurzatkowski, Commodity Analyst
