Commodities: Crude Oil, Gold May Rise on Disappointing US Data

Talking Points

• Commodities Treading Water as Traders Wait for US Data to Shape Fed Bets

• Soft US Industrial Production, Home Sales Reports Likely to Boost Risk Appetite

• Gold Aims to Extend Gains, Crude Oil Chart Setup Argues for Upward Reversal

Commodity prices aretreading water at the start of the trading week as investors wait for the first batch of US economic news-flow to set the tone for a busy week punctuated by on Wednesday’s FOMC policy announcement. Industrial Production and Pending Home Salesreleases are on tap, with economists forecasting broadly neutral outcomes. US economic news-flow has notably soured relative to expectations over the past four weeks however, opening the door for downside surprises.

That may be taken to support the idea that the Fed will be compelled to maintain the “full-sized” QE3 program for significantly longer. Such a result is likely to boost risk appetite, underpinning cycle-sensitive commodities including crude oil and copper. It likewise bodes well for gold and silver as the prospect of longer-lasting stimulus weighs on the US Dollar and boosts anti-fiat demand for precious metals.

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CRUDE OIL TECHNICAL ANALYSIS – Prices put in a bullish Morning Star candlestick pattern at the bottom of a falling channel set from late August, hinting at rebound ahead. Near-term resistance is at 99.77, the 23.6% Fibonacci retracement, with a break above that targeting the channel top at 101.59. Channel bottom support is now at 96.27.

Commodities_Crude_Oil_Gold_May_Rise_on_Disappointing_US_Data_body_Picture_3.png, Commodities: Crude Oil, Gold May Rise on Disappointing US Data

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD TECHNICAL ANALYSIS – Prices broke higher as expected after putting in a bullish Morning Star candlestick pattern. Resistance is now at 1634.06, the 61.8% Fibonacci retracement, with a break above that targeting the 76.4% level at 1390.64. Near-term support is at 1342.57, the 50% Fib. A reversal back beneath that eyes the 38.2% Fib at 1321.09.

Commodities_Crude_Oil_Gold_May_Rise_on_Disappointing_US_Data_body_Picture_4.png, Commodities: Crude Oil, Gold May Rise on Disappointing US Data

Daily Chart - Created Using FXCM Marketscope 2.0

SILVER TECHNICAL ANALYSIS – Prices are testing resistance at 22.80, the 50% Fibonacci retracement. A break higher targets the 61.8% level at 23.34. Near-term support is at 22.25, the 23.6% Fib, with a move beneath that eyeing the 23.6% retracement at 21.58.

Commodities_Crude_Oil_Gold_May_Rise_on_Disappointing_US_Data_body_Picture_5.png, Commodities: Crude Oil, Gold May Rise on Disappointing US Data

Daily Chart - Created Using FXCM Marketscope 2.0

COPPER TECHNICAL ANALYSIS–Prices are consolidating in a Triangle chart pattern, a setup hinting at bullish continuation in this instance. A break above the formation’s top (3.337) initially targets 3.378. Alternatively, a reversal through Triangle support (3.231) aims for swing lows in the 3.190-233 area.

Commodities_Crude_Oil_Gold_May_Rise_on_Disappointing_US_Data_body_Picture_6.png, Commodities: Crude Oil, Gold May Rise on Disappointing US Data

Daily Chart - Created Using FXCM Marketscope 2.0

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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