Commodities: Crude Oil, Gold May Bounce on Soft US ISM Data

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Talking Points

  • Commodities Under Pressure as Markets Digest Wednesday’s FOMC Outcome
  • Crude Oil, Metals May Correct Higher on Soft US ISM Manufacturing Report
  • Copper Continues Narrow Consolidate, Silver Prices Eying 4-Month Support

Commodity prices are under pressure in European trade as investors continue to digest Wednesday’s FOMC policy meeting. The central bank disappointed the markets’ hopes for a meaningful dovish shift in official rhetoric, eroding sentiment across financial markets (as expected). Cycle-linked crude oil and copper prices are following stocks lower while a rebound in the US Dollar is denting anti-fiat demand and weighing on gold and silver.

A respite may be in sight however as October’s USISM Manufacturingdata crosses the wires. Median forecasts suggest factory-sector activity slowed, with the index dropping for the first time since May to print at a five-month low of 55.0. A soft outcome is likely to rekindle hopes for a delay of the Fed’s move to scale back stimulus, boosting risky assets and precious metals. Needless to say, an upside surprise stands to yield the opposite result.

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CRUDE OIL TECHNICAL ANALYSIS Prices are testing support at 95.82, the 76.4% Fibonacci expansion. A break below that targets the bottom of a falling channel set from early September (94.67), followed by the 100% level at 93.18. Alternatively, a break above resistance at 97.45, the 61.8% Fib, targets the intersection of the channel’s upper boundary and the 50% expansion at 98.76.

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Commodities_Crude_Oil_Gold_May_Bounce_on_Soft_US_ISM_Data_body_Picture_3.png, Commodities: Crude Oil, Gold May Bounce on Soft US ISM Data

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD TECHNICAL ANALYSIS Prices turned lower anew, with sellers now testing support at the 23.6% Fibonacci expansion (1318.73). A break below this barrier initially exposes the 38.2% level at 1292.15. Near-term resistance is at 1361.70, the October 28 swing high.

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Commodities_Crude_Oil_Gold_May_Bounce_on_Soft_US_ISM_Data_body_Picture_4.png, Commodities: Crude Oil, Gold May Bounce on Soft US ISM Data

Daily Chart - Created Using FXCM Marketscope 2.0

SILVER TECHNICAL ANALYSIS Prices are moving to challenge support in the 21.30-43 area, marked by a rising trend line set from late June and the 38.2% Fibonacci expansion. A break below that targets the 50% level at 20.76. Alternatively, a move back above the 23.6% Fib at 21.98 exposes the 14.6% expansion at 22.39.

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Commodities_Crude_Oil_Gold_May_Bounce_on_Soft_US_ISM_Data_body_Picture_5.png, Commodities: Crude Oil, Gold May Bounce on Soft US ISM Data

Daily Chart - Created Using FXCM Marketscope 2.0

COPPER TECHNICAL ANALYSISPrices are consolidating in a Triangle chart pattern, a setup hinting at bullish continuation in this instance. A break above the formation’s top (3.334) initially targets 3.378. Alternatively, a reversal through Triangle support (3.236) aims for swing lows in the 3.190-233 area.

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Commodities_Crude_Oil_Gold_May_Bounce_on_Soft_US_ISM_Data_body_Picture_6.png, Commodities: Crude Oil, Gold May Bounce on Soft US ISM Data

Daily Chart - Created Using FXCM Marketscope 2.0

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

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