Commodities Look at US GDP Data to Offset Euro Debt Crisis Jitters


Commodity prices down as returning Eurozone debt crisis fears risk appetite, with the way forward from here hinging on the outcome of the US GDP report.

Commodity prices are down in early European trade as risk aversion grips financial markets following a Standard & Poor’s downgrade of Spain’s credit rating. Sentiment-linked crude oil and silver prices are following shares lower while gold and silver are facing de-facto selling pressure as the dour mood stokes safe-haven demand for the US Dollar. S&P 500 stock index futures are pointing sharply lower, hinting more of the same is on tap as Wall Street comes online.

On the economic data front, all eyes are on the first-quarter US Gross Domestic Product figures, where expectations point to a 2.5 percent annualized quarterly increase after a 3 percent rise in the three months through December. The result is likely to be interpreted in the context of this week’s FOMC policy meeting, with a better-than-expected outcome carrying the possibility of reminding traders that Ben Bernanke’s commentary was hardly as supportive of QE3 as the markets initial reaction suggested. Alternatively, a disappointing print will further fuel stimulus bets, which certainly seems supportive for precious metals but may also (somewhat counter-intuitively) help on the risk appetite front as well.

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