Daily Commodities Analysis: Oil and Gold

Oil rose after Federal Reserve officials said the U.S. benchmark interest rate will stay low until at least 2014 to bolster growth and cut unemployment, boosting fuel demand. Futures advanced 0.5 percent as the Federal Open Market Committee extended its previous pledge to keep rates low at least until the middle of 2013. Meanwhile, The Energy Department reported that total fuel consumption increased 7.5 percent to 19.2 million barrels a day in the week ended Jan. 20. Crude oil supplies rose 3.56 million barrels to 334.8 million, the highest level since the week ended Dec. 2, according to the department. Oil imports advanced 7.1 percent to 8.85 million barrels a day, the fourth increase in five weeks. Crude oil for March delivery rose 45 cents to settle at $99.40 a barrel on the New York Mercantile Exchange. Futures dropped to $97.53 early in the session. Prices are up 15 percent from a year earlier. From the extension of low interest rate down to product demand oil prices acted positively in the market.



GOLD

Gold futures surged to a six-week high after the Federal Reserve said it expects exceptionally low interest rates through at least late 2014. Comex gold futures posted a strong rally and hit fresh six-week high. The precious metals markets were under modest selling pressure prior to the FOMC statement. February gold last traded up $36.70 an ounce at $1,701.40. Spot gold was last quoted up $34.60 at $1,701.50. The very low interest rate environment suggested by the Fed is bullish for gold as well as the concern from the health of U.S economy. Technically, February gold futures prices closed near the session high and scored a big and bullish outside day up on the daily bar chart whereby the high was higher and low was lower than the previous session’s trading range with a higher close. The bulls gained fresh, solid upside technical momentum. Gold bulls have the solid overall near-term technical advantage. Bulls' next upside technical breakout objective is to produce a close above solid technical resistance at the December high of $1,767.10. Bears' next near-term downside price objective is closing prices below chart support at $1,640.00.