Talking Points

Geopolitical tensions fuel breakouts for crude oil and gold
Positive US ISM print overshadowed by Ukraine turmoil
Copper finds support following six straight days of declines

Turmoil in Eastern Europe remains at the dominant driver of price action in the commodities space as traders pushedgold and crude oil to fresh 2014 highs during US trading. With a light economic docket over the session ahead, geopolitical tensions and emerging markets concerns are likely to offer the greatest influence on the precious metals and energy commodities.

Gold and WTI Breakout on Ukrainian Tensions
Mounting tensions between Russia and the Ukraine have sparked broad-based risk aversion in the market as traders retreat out of equities and move towards gold as an alternative store of wealth. The prospect of an escalation towards conflict has also bolstered demand for crude oil on concerns of supply disruptions from Russia, who supplies roughly one third of Western Europe’s oil imports according to Eurostat.

Continued Turmoil Likely to Spark Surge in Volatility
Investor sentiment remains fragile to negative developments regarding the Ukrainian situation which appears to be overshadowing the release of positive economic data for the time-being. The market largely shrugged off a better-than-anticipated manufacturing reading out of the US overnight that provided a bullish signal for future economic growth in the world’s largest economy.

With a light economic docket in the session ahead, if the powder keg in Eastern Europe goes off, gold and oil are likely to surge further. However, if we see tensions dissipate then the commodities may be unable hold onto their panic-driven gains, and thus vulnerable to a retracement.

CRUDE OIL TECHNICAL ANALYSIS – Crude has closed at a fresh 2014 high and cleared selling pressure around the $103.40 mark. With an uptrend still in place we are left with a bullish technical bias for WTI. A potential target may be offered by the September 2013 high at $108.00.