Crude Oil, Gold May Rise if US Data Proves Disappointing

DailyFX

Crude oil and gold prices may have scope to advance if a soft round of US economic data undercuts bets on a forthcoming reduction of Fed stimulus efforts.

Talking Points

  • Crude Oil Technical Positioning Warns of Downward Reversal Ahead
  • Commodities May Find Support if Soft US Data Dents QE “Taper” Bets

A light economic calendar in US trading will see the spotlight turn to May’s House Price Index and July’s Richmond Fed Manufacturing Index are on tap, with minor improvements expected on both fronts.As we noted previously however, US economic outcomes have returned somewhat lackluster results on the whole compared with economists’ forecasts. This keeps the door open for disappointing results that undercut bets on a forthcoming cutback in the size of Federal Reserve stimulus efforts. This may boost risk appetite, offering support to cycle-sensitive crude oil and copper prices and rekindling a degree of anti-fiat demand for gold and silver. Needless to say, relatively strong outcomes imply the opposite dynamic.

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Crude Oil Technical Analysis (WTI) - Prices turned lower as expected, completing a bearish Evening Star candlestick pattern. Initial support is at 105.06, with a break below that targeting the 38.2% level at 102.70. Near-term resistance is at 108.89, the July 19 high.

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Commodities_Crude_Oil_Gold_May_Rise_if_US_Data_Proves_Disappointing_body_Picture_3.png, Crude Oil, Gold May Rise if US Data Proves Disappointing

Daily Chart - Created Using FXCM Marketscope 2.0

Gold Technical Analysis (Spot) - Prices broke resistance at 1297.75, the 38.2% Fibonacci retracement, and moved to challenge the 1334.08-49.27 region marked by the 50% Fib and a rising channel set from late June. A further push higher beyond that aims for the 61.8% retracement at 1370.40. The 1297.75 level has been recast as near-term support.

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Commodities_Crude_Oil_Gold_May_Rise_if_US_Data_Proves_Disappointing_body_Picture_4.png, Crude Oil, Gold May Rise if US Data Proves Disappointing

Daily Chart - Created Using FXCM Marketscope 2.0

Silver Technical Analysis (Spot) - Prices are pulling back from resistance at 20.73, the 38.2% Fibonacci retracement, to retest a recently broken barrier at 20.13. A break back below that eyes a rising trend line at 19.48. Alternatively, a move above resistance eyes the 50% Fib at 21.51.

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Commodities_Crude_Oil_Gold_May_Rise_if_US_Data_Proves_Disappointing_body_Picture_5.png, Crude Oil, Gold May Rise if US Data Proves Disappointing

Daily Chart - Created Using FXCM Marketscope 2.0

Copper Technical Analysis (COMEX E-Mini) - Prices are consolidating below resistance at the top of a rising channel (3.232), a barrier reinforced by the 23.6% Fibonacci retracement at 3.221. A break above that eyes a horizontal pivot at 3.270. Near-term support is at 3.112, the 38.2% level.

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Commodities_Crude_Oil_Gold_May_Rise_if_US_Data_Proves_Disappointing_body_Picture_6.png, Crude Oil, Gold May Rise if US Data Proves Disappointing

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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