Crude oil prices may test above $79/barrel while gold and silver may fail at key technical resistance as if the Dallas Federal Reserve’s manufacturing activity gauge adds 2% as expected in December. Commodities – Energy OIL PRICES MAY TEST ABOVE $79 AS US DATA BOOSTS DEMAND OUTLOOK Crude Oil (WTI) $78.28 +$0.23 +0.29% Prices broke out of a rising channel that had guided prices higher from the swing bottom below $70 set earlier this month and the path looks clear for a rise to test above $79 at this point. The nudge toward resistance may come if the Dallas Federal Reserve’s manufacturing activity gauge adds 2% as expected in December, yielding the largest increase in two and a half years boosting recovery prospects for the world’s largest crude consumer. GOLD, SILVER MAY FAIL AT RESISTANCE ON US MANUFACTURING DATA Gold $1110.53 +$5.08 +0.46% Gold prices look to be testing resistance at the top of a falling channel that has guided spot rates lower for most of the current month, with a break higher exposing horizontal support-turned-resistance at $1141.78. Fundamentally, the metal retains a strong inverse correlation with the outlook Federal Reserve monetary policy (as expressed by the spread between Dec’2010 and Mar’2010 fed funds futures). This means that an uptick in December’s edition of the Dallas Fed’s manufacturing activity gauge (set to rise 2%, the most since June 2007) may prove to weigh on prices. Silver $17.55 +$0.54 +0.31% Positioning is strikingly similar to gold, with prices testing resistance at the top of a falling channel established from early December. Also in line with its more expensive counterpart, a significant inverse correlation with the 2010 fed funds futures spread hints that resistance may hold as the Dallas Fed’s manufacturing activity metric crosses the wires.

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