Look out for sugar and coffee as negative momentum takes hold

Our momentum indicator on major commodities has now almost completely turned negative across the different sectors, with Brent crude oil turning on Friday following the sell-off earlier in the week. Sugar has seen the longest period of negative momentum without actually showing much of a return from a seller's perspective. Money managers have been busy selling both sugar and coffee, with the latest data from the CFTC showing that the speculative net-short positions held in both commodities are at or near record highs. Any change in the negative perception of these two could trigger a major round of short covering, thereby helping to assist a move higher.

Gold investors, both in futures and ETP's, stepped up their selling last week when a technical sell signal and other non-supportive news eroded sentiment further. The much reduced holdings, especially in futures and the fact that the gross-short is now at its highest level since 1999, when both the BoE and SNB were busy selling out of their gold reserves, has the potential of seeing support return. A dovish Ben Bernanke at this week's testimony before Congress and the Senate may help sentiment, with resistance currently found at 1,605 USD/oz and 1,625 USD/oz.