Commodities CrudeOil Gold Silver

Crude Oil
With cold temperatures in the United States adding credence to the early 2010 bullish demand scenario and the U.S. dollar moving lower, crude oil prices rose to a five-week high during the week of 28 December. Prices edged closer to $80 after trading below $75 as recently as 22 December. Such wide price swings can be expected at the end of the year where the holiday period results in light trading volumes. WTI oil prices could continue to move between $75 and $81 into the beginning of January. Crude oil inventories in the United States have been posting notable declines in line with the increase in refinery runs. Oil product stocks also have been declining, on rising demand for distillates. Prices are expected to break out of this range when market participants perceive the global economic recovery to be on firmer footing.

Gold
Gold prices may move more firmly back above $1,100 this week, but could continue to consolidate around this level overall. Stronger investment demand is expected to revive in early 2010, moving prices higher. Over the past two weeks gold has traded in a narrow range mostly between $1,075 and $1,119. Slight shifts in investor sentiment amid lighter year-end trading volumes may have swayed prices more forcefully than they otherwise would have. Combined exchange traded fund gold holdings were 56.74 million ounces on 29 December, not far from the record 57.08 million ounces held in the middle of December. Increased movements in the U.S. dollar have been tugging at gold prices recently. Economic data slightly better than some market participants had expected has been supportive of the dollar and has helped weigh on gold. Any dips in gold prices as a result of such views have been met quickly with renewed investor buying, however. Gold price volatility may pick soon as investors begin to adjust their portfolios for the new year. It is likely that they will add gold to their portfolios, at least in the first few months of the year.

Silver
Silver may trade around $17.00 for most of this week, as investors return more
forcefully to this market. Price dips below this level have been taken as buying
opportunities over the past two weeks. This increased buying may have come more from fabricators than from investors. Combined exchange traded fund silver holdings have been little changed at 465.57 million ounces since 22 December. Reduced activity from investors during the last couple of weeks may have contributed to the relatively lower silver price volatility than in previous weeks. A price decline toward $16.00 – $16.25 may see increased buying, however, from both end-users and investors. On the upside, a price rally toward $18.00 also would be expected to spark buying from fabricators and investors. Fabricators may buy on concerns of having to purchase silver at higher prices later, while investors may buy in expectation of higher prices.