A quiet European trading session has been highlighted by a decline in crude oil prices following the announcement of Osama bin Laden's death. Spot silver prices rebounded after the commodity sold off after an increase in margin requirement fueled profit taking. This afternoon US markets are open and liquidity should improve as traders eye the release of US manufacturing PMI.
Spot crude oil was trading lower at $111.85 from an opening week price of $113.68. Support is found at $110 and short term resistance at last week's high of $113. Spot gold has recovered to $1,557 after trading as low as $1,540. Silver prices rebounded to $45.50 from a low of $42.51.
Crude oil prices were down as markets perceived the death of bin Laden as a reduced security risk and traders sent prices lower. Since the beginning of the "Arab Spring", crude oil price have traded sharply higher as a risk premium has been priced into the market to value of crude oil with the perceived geopolitical risks in the Middle East. While bin Laden's death is not directly connected with the energy industry, his passing has been taken into account by crude oil traders. The landmark event is certainly a feather in the cap for President Obama, much as the capture of Saddam Hussein was for former President Bush.
Spot silver has rebounded following a sharp decline at the opening of this week's trading. The cause for the sell-off was an increase in margin requirements for silver future contracts which spurred profit taking after the commodity traded near the $50 psychological resistance. Traders should continue to find opportunities to buy spot silver on a rebound in the price as the fundamentals for the commodity have gone unchanged. Initial resistance is found at $47.25 followed by last week's high of $49.78.
The EUR/USD is gaining strength as the New York open nears with the release of the ISM Manufacturing PMI report. A strong data release should feed into dollar selling. Currently the EUR/USD is testing a short term consolidation pattern with resistance at 1.4850. A breach here will test last week's high at 1.4880, with an eventual target at the 2009 high of 1.5140.