Crude oil looks to improvements in US jobless claims and earnings from key retailers to shape risk trends and guide trading. Meanwhile, gold technical positioning is moving closer in line with our bearish forecast. Crude continues to consolidate in the upper portion of the now-familiar $76.82-80.46 range, with near-term support seen at $78.28. The fundamental landscape offers plenty of catalysts. US jobless claims are set to decline once more, offering hope of stabilization in the world’s largest oil-consuming nation. Meanwhile, third-quarter earnings reports from Dow Jones component and bargain retailing leader Wal-Mart Inc as well as Kohl Corp, a middle-income department store operator, will help guide attitudes about the health of the world’s largest consumer base and amid fears that the recovery of recent months cannot be sustained after stimulus measures are withdrawn. To that effect, the outcome of these reports is likely to be instrumental in shaping the trajectory of risk appetite and with them the path of crude prices as well. GOLD TECHNICAL OUTLOOK DARKENS FURTHER, SILVER DIVERGING Gold $1116.20 -$1.21 -0.11% Yesterday, we wrote that “gold prices look positioned to reverse lower from record highs, with technical positioning revealing a Rising Wedge bearish reversal chart formation bolstered by negative divergence on the RSI momentum gauge.” While we do not have confirmation of a breakout yet, the current downturn seems to hint that we are heading towards validating the Wedge scenario. A push lower initially targets $1097.72. As with oil, the fundamental factors in play are US labor market figures and retailers’ earnings reports. Silver $17.52 -$0.08 -0.45% Silver continues to consolidate, oscillating between $17.25 and $17.77. Indeed, prices seem to be behaving rather more like oil and the US Dollar Index (both showing consolidation patterns) than its more expensive counterpart, which has continued to take out record highs over recent days. Silver is clearly a less-fashionable investment vehicle for the inflation-hedging crowd that has pushed the gold higher on expectations that central banks’ extraordinarily easy policy stance will create runaway price growth. However, the ‘great re-inflation’ story is fundamentally rooted in a weakening US Dollar hypothesis, so if gold prices reflect that worldview than the Dollar Index should look more like the inverse of that than silver. Oil, too, should fall in line with the yellow metal considering its current highly speculative status. Interestingly, this means that silver positioning could be suggesting that gold has run beyond the scope of its fundamental foundation.

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