Crude Oil, Gold May Find Lifeline in Soft US Economic Data

Ilya Spivak

Crude oil and gold prices may find a lifeline if US Consumer Confidence data falls short of expectations, undercutting the case for “tapering” Fed QE efforts.

Talking Points

  • Commodities to Rise if Soft US Data Dents Case for Tapering Fed QE
  • Crude Oil Technical Positioning Points to Continued Weakness Ahead

All eyes are on the July’s US Consumer Confidencefigure, which investors will look toward tohelpinform speculation surrounding the Fed’s intentions to “taper” the size of its QE asset purchases. On the whole, US economic outcomes appear to be losing momentum relative to expectations over recent weeks. This keeps the door open for a disappointing print that undercuts the case for a near-term reduction in stimulus.

Such a result is likely to be supportive for cycle-sensitive crude oil and copper prices as traders cheer on the possibility of a comparatively more distant reduction in policy support for the world’s largest economy. It will probably boost anti-fiat demand for gold and silver as well as investors consider the Dollar dilution implications of a longer-lasting QE effort. S&P 500 futures are trading comfortably higher ahead of the opening bell on Wall Street, bolstering the case for a “risk-on” scenario.

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Crude Oil Technical Analysis (WTI) - Prices turned lower as expected. Sellers have now overcome support at 105.06, the 23.6% Fibonacci retracement, exposing the 38.2% level at 102.70. A further push beneath that aims for the 50% Fib at 100.79. The 105.06 level has been recast as near-term resistance, with a reversal back above that eyeing the July 19 high at 108.89.

Commodities_Oil_Gold_May_Find_Lifeline_in_Soft_US_Economic_Data_body_Picture_3.png, Crude Oil, Gold May Find Lifeline in Soft US Economic Data
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Commodities_Oil_Gold_May_Find_Lifeline_in_Soft_US_Economic_Data_body_Picture_3.png, Crude Oil, Gold May Find Lifeline in Soft US Economic Data

Daily Chart - Created Using FXCM Marketscope 2.0

Gold Technical Analysis (Spot) - Prices put in a Bearish Engulfing candlestick pattern below resistance at the top of a rising channel set from late June, hinting a move lower is ahead. Channel bottom support is now at 1312.15, with a break beneath that initially targeting the 23.6% Fibonacci expansion at 1273.98. Channel resistance is now at 1379.51.

Commodities_Oil_Gold_May_Find_Lifeline_in_Soft_US_Economic_Data_body_Picture_4.png, Crude Oil, Gold May Find Lifeline in Soft US Economic Data
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Commodities_Oil_Gold_May_Find_Lifeline_in_Soft_US_Economic_Data_body_Picture_4.png, Crude Oil, Gold May Find Lifeline in Soft US Economic Data

Daily Chart - Created Using FXCM Marketscope 2.0

Silver Technical Analysis (Spot) - Prices are testing support at the bottom of a bearish Flag pattern (), with a break downward on a daily closing basis targeting the 23.6% Fibonacci expansion at 19.03. Near-term resistance is at 20.59, the July 23 high, followed by the Flag top at 20.93.

Commodities_Oil_Gold_May_Find_Lifeline_in_Soft_US_Economic_Data_body_Picture_5.png, Crude Oil, Gold May Find Lifeline in Soft US Economic Data
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Commodities_Oil_Gold_May_Find_Lifeline_in_Soft_US_Economic_Data_body_Picture_5.png, Crude Oil, Gold May Find Lifeline in Soft US Economic Data

Daily Chart - Created Using FXCM Marketscope 2.0

Copper Technical Analysis (COMEX E-Mini) - Prices are testing through support at the bottom of a bearish Flag continuation pattern (3.086) and the 38.2% Fibonacci expansion at 3.067. A break below the latter level targets the 50% level at 3.016. Near-term resistance is at 3.130, the 23.6% Fib.

Commodities_Oil_Gold_May_Find_Lifeline_in_Soft_US_Economic_Data_body_Picture_6.png, Crude Oil, Gold May Find Lifeline in Soft US Economic Data
View photos
Commodities_Oil_Gold_May_Find_Lifeline_in_Soft_US_Economic_Data_body_Picture_6.png, Crude Oil, Gold May Find Lifeline in Soft US Economic Data

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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