Crude Oil to Fall as Gold Gains on Soft US Retail Sales Report

DailyFX

Gold prices are likely to rise on US Dollar weakness while crude oil falls amid risk aversion if April’s US Retail Sales data falls short of economists’ expectations.

Talking Points

  • Crude Oil, Copper to Follow Stocks Lower if US Retail Sales Data Disappoints
  • Gold and Silver May Rise as US Dollar Falls on Waning Fed QE Reduction Bets

The spotlight is on April’s US Retail Sales report to start the trading week. Expectations call for receipts to decline 0.3 percent, marking the second consecutive print in negative territory. Despite a handful of recent upside surprises, US economic news-flow has tended to underperform relative to consensus forecasts since late March. This hints analysts continue to overestimate the health of the world’s largest economy and opens the door for a downside surprise.

Commodities are already under pressure before data crosses the wires and S&P 500 index futures are trading lower, pointing to a risk-off mood prevailing ahead of the opening bell on Wall Street. If the report indeed falls short of expectations, this is likely to undermine risk appetite andpunish cycle-sensitive crude oil and copperprices. Gold and silvermay find support however as ebbing bets on an early unwinding of Federal Reserve stimulus efforts weigh on the US Dollar.

Crude Oil Technical Analysis (WTI) - Prices put in a Harami candlestick pattern below falling trend line set from early January, hinting a turn lower may be ahead. Near-term support is at 94.16, marked by a rising trend line set from the April 18 low, with a push beneath that aiming for the 38.2% Fibonacci retracement at 92.71. Alternatively, a push above the trend line (now at 96.63) aims for the 38.2% Fib expansion at 97.73.

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Commodities_Oil_to_Fall_as_Gold_Gains_on_Soft_US_Retail_Sales_Report_body_Picture_3.png, Crude Oil to Fall as Gold Gains on Soft US Retail Sales Report

Daily Chart - Created Using FXCM Marketscope 2.0

Gold Technical Analysis (Spot) - Prices are testing below support at 1448.77, the 14.6% Fibonacci retracement to challenge the 23.6% level at 1424.59. A break below the latter level on a daily closing basis exposes the 1400/oz figure and the 38.2% Fib at 1385.36. Near-term resistance is at 1487.65, the 61.8% Fib expansion.

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Commodities_Oil_to_Fall_as_Gold_Gains_on_Soft_US_Retail_Sales_Report_body_Picture_4.png, Crude Oil to Fall as Gold Gains on Soft US Retail Sales Report

Daily Chart - Created Using FXCM Marketscope 2.0

Silver Technical Analysis (Spot) - Prices recoiled from resistance at 24.49, the 23.6% Fibonacci retracement. Near-term support is at 23.55, the 14.6% Fib, with a drop beneath that eyeing the April 16 bottom at 22.03. Alternatively, a reversal above resistance targets the 38.2% level at 26.02.

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Commodities_Oil_to_Fall_as_Gold_Gains_on_Soft_US_Retail_Sales_Report_body_Picture_5.png, Crude Oil to Fall as Gold Gains on Soft US Retail Sales Report

Daily Chart - Created Using FXCM Marketscope 2.0

Copper Technical Analysis (COMEX E-Mini) - Prices are testing above resistance at 3.388, the 61.8% Fibonacci retracement. A confirmed break upward on a daily closing basis exposes the 76.4% level at 3.469. Near-term support is at 3.322, the 50% Fib.

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Commodities_Oil_to_Fall_as_Gold_Gains_on_Soft_US_Retail_Sales_Report_body_Picture_6.png, Crude Oil to Fall as Gold Gains on Soft US Retail Sales Report

Daily Chart - Created Using FXCM Marketscope 2.0

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

To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak

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