Crude Oil, Gold Prices Look for Cues in US Retail Sales Data

DailyFX

Crude oil and gold prices are looking to the US Retail Sales report for direction cues as a correction in risk appetite threatens to strike the markets.

Talking Points

  • Crude Oil and Copper Look to US Retail Sales Data to Refuel Risk Trends
  • Gold, Silver May Pull Back if Better US Data Weighs on Anti-Fiat Demand

Commodity prices are in consolidation mode as markets wait for February’s US Retail Sales data to cross the wires. Expectations call for an increase of 0.5 percent from the prior month. A print in line with expectations would fall broadly in line with trend averages and seems unlikely to yield a significant response from financial markets. That will leave the door open for cycle-sensitive crude oil and copper prices to decline along with a broad-based correction in risk appetite playing out on Asian and European bourses. S&P 500 index futures are pointing sharply lower ahead of the opening bell on Wall Street.

With that in mind, US economic data has increasingly outperformed relative to expectations since early February (according to data from Citigroup), opening the door for an upside surprise. Such an outcome may drive optimism about the resilience of the US recovery in the face of mounting fiscal headwinds, boosting risk sentiment anew. That is likely to bode well for crude oil and copper. Meanwhile, gold and silver may pull back if improving US economic news continues to fuel speculation about an earlier-than-expected unwinding of Federal Reserve stimulus efforts and dent anti-fiat demand (although for our part, we are sceptical of the markets’ post-NFP Fed views).

WTI Crude Oil (NY Close): $92.06 // +0.11 // +0.12

Prices continue to recover after putting in a bullish Piercing Line candlestick pattern. Buyers are now testing the 38.2% Fibonacci retracement at 92.73, with a break above that targeting the 50% level at 93.78. Near-term support is at 91.43, the 23.6% Fib. A turn beneath that eyes the March 4 low at 89.34.

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Commodities_Crude_Oil_Gold_Prices_Look_for_Cues_in_US_Retail_Sales_Data_body_Picture_3.png, Crude Oil, Gold Prices Look for Cues in US Retail Sales Da...

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1581.55 // +2.75 // +0.17%

Prices broke above resistance at 1585.81, the 23.6% Fibonacci retracement, exposing the 38.2% level at 1604.84. A further push above that aims for the 50% Fib at 1620.28. The 1585.81 has been recast support, with a turn back beneath that eyeing the 14.6% retracement at 1574.06.

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Commodities_Crude_Oil_Gold_Prices_Look_for_Cues_in_US_Retail_Sales_Data_body_Picture_4.png, Crude Oil, Gold Prices Look for Cues in US Retail Sales Da...

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Silver (NY Close): $28.97 // -0.02 // -0.07%

Prices continue to consolidate above support at 28.46, the 23.6% Fibonacci expansion. Near-term resistance is in the 29.42-92 area, with a break higher exposing a falling trend line now at 30.64. Alternatively, a reversal below support targets the 38.2% level at 27.86.

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Commodities_Crude_Oil_Gold_Prices_Look_for_Cues_in_US_Retail_Sales_Data_body_Picture_5.png, Crude Oil, Gold Prices Look for Cues in US Retail Sales Da...

Daily Chart - Created Using FXCM Marketscope 2.0

COMEX E-Mini Copper (NY Close): $3.518 // +0.008 // +0.23%

Prices are testing above resistance marked by a formerly broken rising trend line set from early June and the 23.6% Fibonacci expansionat 3.536.A break higher on a daily closing basis exposes the February 28 high at 3.601. Near-term support is at 3.495, the 38.2% Fib.A drop beneath that targets the 50% level at 3.463.

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Commodities_Crude_Oil_Gold_Prices_Look_for_Cues_in_US_Retail_Sales_Data_body_Picture_6.png, Crude Oil, Gold Prices Look for Cues in US Retail Sales Da...

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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