Crude Oil and Gold Recover on Fed, ECB Stimulus Hopes

DailyFX

Crude oil and gold prices are on the upswing to start the trading week as optimism about policy support from the Fed and the ECB boosts risk appetite.

Talking Points

  • Crude Oil, Copper Prices Rise as Risk Appetite Firms on Stimulus Hopes
  • Gold and Silver Capitalize as US Dollar Comes Under Heavy Pressure

Commodity prices are on the upswing to start the trading week as risk appetite firms across the financial markets. The newswires are chalking up the chipper mood to rising monetary stimulus expectations ahead of this week’s FOMC and ECB policy announcements. The Fed is expected to strike a dovish tone, reinforcing the continuity of QE3 in the wake of recently soft US data. Meanwhile, consensus forecasts now point to a rate cut from Mario Draghi and company.

Cycle-sensitive crude oil and copper prices are following shares higher while gold and silver find de-facto support as the US Dollar comes under pressure, increasing the allure of anti-fiat assets. The greenback started the week on the defensive after Friday’s disappointing US GDP report, with the pickup sentiment only amplifying the move lower on evaporating haven flows. US Pending Home Sales figures headline the economic calendar from here, with expectations calling for a pick-up in March compared with the prior month.

WTI Crude Oil (NY Close): $93.00 // -0.64 // -0.68%

Prices are testing support at 92.62, the 76.4% Fibonacci retracement. A break back below this barrier exposes the 61.8% mark at 91.28. Near-term resistance is in the 93.84-94.79 area, marked by the April 10 and 25 swing highs. A push above that eyes rising trend line support-turned-resistance now at 97.46.

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Commodities_Crude_Oil_Gold_Recover_on_Fed_ECB_Stimulus_Hopes_body_Picture_3.png, Crude Oil and Gold Recover on Fed, ECB Stimulus Hopes

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1462.09 // -5.78 // -0.39%

Prices put in a Spinning Top candlestick below resistance at 1469.28, the 50% Fibonacci retracement, pointing to indecision and hinting a pullback may be ahead. Near-term support is 1434.43, the 38.2% Fib, with a break beneath that aiming for the 23.6% expansionat 1391.30. Alternatively, a break above 1469.28 on a daily closing basis exposes the 61.8%level at 1504.14.

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Commodities_Crude_Oil_Gold_Recover_on_Fed_ECB_Stimulus_Hopes_body_Picture_4.png, Crude Oil and Gold Recover on Fed, ECB Stimulus Hopes

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Silver (NY Close): $23.99 // -0.40 // -1.65%

Prices are testing resistance at 24.34, the 38.2% Fibonacci retracement. A break above that targets the 50% level at 25.05. Near-term support is at 23.46, the 23.6% level, with a reversal beneath that aiming for the April 16 low at 22.03.

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Commodities_Crude_Oil_Gold_Recover_on_Fed_ECB_Stimulus_Hopes_body_Picture_5.png, Crude Oil and Gold Recover on Fed, ECB Stimulus Hopes

Daily Chart - Created Using FXCM Marketscope 2.0

COMEX E-Mini Copper (NY Close): $3.186 // -0.056 // -1.73%

Prices are testing resistance at 3.213 the 50% Fibonacci expansion, with a break higher targeting the 38.2% level at 3.269. Near-term support is at 3.157, the 61.8% Fib, with a reversal back beneath that aiming for the 76.4% expansion at 3.087.

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Commodities_Crude_Oil_Gold_Recover_on_Fed_ECB_Stimulus_Hopes_body_Picture_6.png, Crude Oil and Gold Recover on Fed, ECB Stimulus Hopes

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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