Stocks Offer Surprising Strength, So Far

The United States will be celebrating Independence Day on Thursday -- and investors may choose to celebrate that the U.S. stock market didn't slump on Wednesday. 

In fact, stocks recovering from early selling, and the major averages all finished with modest gains. 

Crude oil (-CL), however, closed above $100 a barrel in New York for the first time since May 3, 2012, on speculation that political turmoil in Egypt would push prices higher. And motorists are likely to pay more at the pump as a result. 

The positive finish for stocks may have surprised some. Futures trading overnight had suggested a nasty open because of Egypt and its effect on oil prices, and European stocks were off more than 1%. 

But the catalysts were bullish: improving jobless claims in the United States and some cheer on the part of business that a mandate for employers with more than 50 workers to provide health insurance has been put off a year.

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Gold, Silver Rise; Oil Rises on Egypt Tension

Gold and most other metals closed higher Wednesday, as escalating tensions in Egypt pushed the price of crude oil and other energy futures higher.

Gold for August delivery rose $8.50, or 0.7 percent, to settle at $1,251.90 an ounce Wednesday. Silver and copper also rose, but platinum and palladium fell.

Silver for July delivery rose 39.1 cents, or 2 percent, to $19.689 an ounce. July copper rose 3.2 cents, or 1 percent, to $3.1740 a pound.

July platinum fell $21, or 1.5 percent, to $1,345.30 an ounce and September palladium fell $3.20, or 0.5 percent, to $685.70 an ounce.

Crude oil rose to its highest level in more than a year as Egypt's political turmoil escalated and U.S. supplies fell. Egypt's military ousted embattled President Mohammed Morsi, suspended the country's constitution and called early elections.

Benchmark oil rose $1.64 to $101.24 a barrel on the New York Mercantile Exchange. It rose to $102.18 a barrel earlier, its highest price since last May.

U.S. crude supplies fell by 10.3 million barrels from the previous week, the Energy Department reported, more than three times the drop that analysts had expected.

In other energy futures trading, natural gas gained 4 cents to end at $3.69 per 1,000 cubic feet, heating oil added 5 cents to finish at $2.95 per gallon, and wholesale gasoline rose 5 cents to end at $2.84 per gallon.

Wheat and soybeans rose. Corn ended flat.

Wheat for September delivery rose 6.75 cents to $6.65 a bushel. Soybeans for November delivery rose 8.25 cents to $12.5075 a bushel. Corn for December delivery was unchanged at $5.0275 a bushel.

U.S. markets will be closed Thursday for Independence Day.

News Source: http://abcnews.go.com/Business/wireStory/gold-silver-rise-oil-rises-egypt-tension-19571122#.UdVutvkwp9M

Charts Show Gold Sell-Off Could Get A Lot Uglier

From a technical perspective, the outlook for gold is looking increasingly bearish, according to analysis by Australia New Zealand Bank (ANZ), which says the recent sharp declines open the risk of much sharper corrections.

If the yellow metal slides below a key support level of $1,150, the selloff could accelerate to $1,030 or even $870 an ounce – levels not seen since 2008 during the global financial crisis, Victor Thianpiriya, commodity strategist, Asia at ANZ wrote.

(Read More: Has Gold Entered a Long Term Bear Market?)

"Closing near the lows of the month [June] underscores the risk of much deeper corrective declines… Caution is therefore, key," Thianpiriya said.

3-Month View of Spot Gold

"Volatility remains high. At times like this, the market can ignore fundamentals, and the technical picture takes on greater importance," he added.

Last week, gold fell to its lowest level since 2010 at $1,180, with losses in the precious metal amounting to 22 percent since the start of the aggressive selloff in mid-April.

(Read More: Gold Falls Through Production Cost Levels)

The yellow metal posted its worst quarterly performance on record, down 23 percent over the April-June period.

Relentless selling by exchange traded funds (ETFs) has been behind the poor performance of the precious metal in the recent months, outweighing physical demand for jewelry, bars and coins.

Thianpiriya noted that a close above $1,272 could turn the negative bias in gold around, and allow for a period of rebounds.

However, some strategists believe gold has entered a long term bear market, pointing a tapering of the Federal Reserve's unprecedented monetary stimulus alongside a benign global inflationary environment as major headwinds for the metal.

(Read More: History Warns: Gold Will Keep Falling)

Many banks have slashed their forecasts for gold in the recent weeks, the most recent being HSBC, which predicts that the average gold price will be $1,396 in 2013, down from $1,542.

Among the most bearish, however, is UBS, which warns that gold is at risk of becoming "obsolete" as the Fed winds down its stimulus program. It believes prices could fall to $1,150 in the coming 3 months.