Crude Oil, Gold May Rise on Disappointing US Jobs Data

DailyFX

Crude oil and gold may rise if a disappointing US jobs report reinforces the likelihood of continued aggressive stimulus from the Federal Reserve.

Talking Points

  • Gold Continues to Sink on Slumping Investor Demand, Silver Follows
  • Crude Oil, Copper Tumble on Disappointing US Employment Data

All eyes are on the March set of US employment figures into the end of the trading week. Expectations call for the economy to add 190k jobs, marking a slight slowdown from the 236k increase in February but still returning an outcome well the 12-month trend average (164k). The possibility of a downside surprise seems significant however.

US economic news-flow has begun to underperform again, snapping a streak of rosy surprises between early February and late March. Disappointing results on key March metrics – most notably the manufacturing- and service-sector ISM reports – earlier in the week reinforce the threat of a soft print ahead.

Such a scenario is likely to be seen as implying continuity of aggressive Federal Reserve stimulus efforts. That seems likely to boost risk appetite and pull cycle-sensitive crude oil and copper prices higher. Gold and silver may likewise advance as dilution fears sting the US Dollar and reboot in anti-fiat demand.

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WTI Crude Oil (NY Close): $93.23 // -1.19 // -1.26%

Prices broke support at 94.35, the 23.6% Fibonacci retracement, exposing the 38.2% level at 91.96. A further push below that aims for the 50% mark at 90.03. The 94.35 mark has been recast as near-term resistance, with a turn back above that eyeing a falling trend line at 97.54.

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Commodities_Crude_Oil_Gold_May_Rise_on_Disappointing_US_Jobs_Data_body_Picture_3.png, Crude Oil, Gold May Rise on Disappointing US Jobs Data

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1554.59 // -3.35 // -0.22%

Prices are testing support at 1545.78, the 50% Fibonacci expansion, with a Hammer candlestick hinting a bounce may be ahead. Near-term resistance is at 1562.58, the 38.2% level, with a break above that targeting the 23.6% Fib at 1583.37. Alternatively, a drop below support aims for the 61.8% expansion at 1528.98.

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Commodities_Crude_Oil_Gold_May_Rise_on_Disappointing_US_Jobs_Data_body_Picture_4.png, Crude Oil, Gold May Rise on Disappointing US Jobs Data

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Silver (NY Close): $26.96 // -0.04 // -0.15%

Prices put in a Hammer candlestick above support at 26.55, the 61.8% Fibonacci expansion, hinting a bounce may be ahead. Near-term resistance is at 27.09, the 50% level, with a break above that targeting the 38.2% Fib at 27.62. Alternatively, a drop below support aims for the 76.4% expansion at 25.89.

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Commodities_Crude_Oil_Gold_May_Rise_on_Disappointing_US_Jobs_Data_body_Picture_5.png, Crude Oil, Gold May Rise on Disappointing US Jobs Data

Daily Chart - Created Using FXCM Marketscope 2.0

COMEX E-Mini Copper (NY Close): $3.352 // +0.018 // +0.54%

Prices put in a bullish Piercing Line candlestick above support at the bottom of a falling channel set from late February, hinting a bounce may be ahead. Initial resistance is at 3.420, marked by the channel top and the 23.6% Fibonacci retracement. A break above that initially targets the 38.2% level at 3.491. Near-term support is at 3.305, the April 4 low.

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Commodities_Crude_Oil_Gold_May_Rise_on_Disappointing_US_Jobs_Data_body_Picture_6.png, Crude Oil, Gold May Rise on Disappointing US Jobs 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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