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Commodities Brief – Precious metals rally on Italian quagmire, Gold testing psychological 1600 barrier

Gold prices have inched higher Tuesday amid the uncertainly of the Italian election results and the unpredictable direction that the country may take in recent days or weeks. With investors cautioned by risk, gold briefly breached the USD $1600 per oz. level (1601.65 session high), and is testing the psychological barrier in these moments, which is doubling as resistance. Fundamentally, gold is trading above its 20, 50, and 200-day SMA, which have converged in the 1592.75 region. Despite the recent rally, the yellow metal sits at the crossroads, eyeing Fed Chairman Ben Bernanke’s testimony later today at 15:00 GMT – the perspective or tone of his remarks has the potential to sustain the recent rebound in prices or send them crashing back towards 7-month lows incurred last week.

In addition, Silver prices have experienced a modest gain recently, albeit in a more uneven manner. The white metal has lost its grip on the 29.00 level and even fell towards the 28.76 mark (session low), before paring the majority of its losses to trade at USD $29.97 per oz. in these moments, down -0.12%. Like its yellow counterpart, the short-term direction will be dictated by dovishness of the Fed remarks later today,

Moving to Crude oil, the 93.00 level did not prove to be an adequate support, as prices crashed below yesterday and seemed to be in escape velocity. With the bottoming out of crude in the region of 92.05 (session low) Thursday, the price has rallied steadfastly to $92.37/bbl during European trading.

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