Commentary: Crude oil will look to advance further into 25-month high territory this week after rising almost 6.5% last week. The disappointing jobs number on Friday failed to arrest crude’s advance, with prices now just shy of the $90 level. Economic data this week is light, thus momentum established last week may carry over and send prices higher. On the other hand, after such a sizzling run, profit taking is always a possibility. In any event, we continue to believe that prices are in price discovery mode and set to advance well into the $90’s before any meaningful pullback. European sovereign debt concerns have cooled considerably with Portuguese and Spanish 10-year government bond yields falling over 100 basis points and 50 basis points respectively last week. At the same time, the U.S. economy is showing signs of noticeable improvement, the latest nonfarm payrolls report notwithstanding. Finally, the most important consideration for oil prices—emerging market demand growth—is very much on track with China seemingly able to orchestrate something of a soft landing. Until these bullish factors shift meaningfully, the trend remains higher. Technical Outlook: Prices have broken above resistance at $88.63 – the 11/11 swing high – but negative RSI divergence hints the rally may not have much longer to continue. Initial resistance stands at $90.65, the intersection of the 123.6% Fibonacci extension of the 11/11-11/17 downswing, and the top of a rising channel carved out since late August. The $88.63 level has been recast as near-term support. Commentary: Gold surged to a new record closing high last week after a weak U.S. jobs report reinforced perceptions that monetary policy will stay weak for a long time to come. Under these conditions, gold traders have free reign to bid prices higher, with seemingly no end in sight. We also saw gold ETF holdings advance the most in several weeks. Until price action suggests otherwise, gold remains a “buy the dips” market. While news flow remains supportive as it relates to monetary conditions, we are also hearing that China’s gold imports have surged 500% from last year to 209 metric tons during the first 10 months of this year. That’s a significant increase in a roughly 3500 ton market. The higher gold rises, the more interest it seems to be generating. Some would call this characteristic of a bubble. That remains to be seen. Technical Outlook: On a daily closing basis, gold finished last week at a new record high. However, acute negative RSI divergence hints bullish momentum may not have much staying power. Resistance stands at $1424.60, the 11/9 wick high, while initial support lines up at the 14.6% Fibonacci retracement of the 7/28-11/9 advance ($1385.53).

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