Gold, Crude Oil Eye US Data as Fed Taper Speculation Swells

DailyFX

Talking Points

  • Commodities Look to US Economic Data to Guide Fed “Taper” Bets
  • Gold and Silver Complete Critical Technical Breaks to the Downside
  • Crude Oil Chart Setup Hints at Topping Below $100/barrel Figure

Commodity prices are treading water ahead of the opening bell on Wall Street, with investors waiting for Augusts’ Retail Sales figure and Septembers’ preliminary University of Michigan Consumer Confidence gauge to set the tone for building speculation head of next week’s FOMC meeting. The former is expected to show receipts rose 0.5 percent from the prior month, an outcome broadly in line with the trend average (0.4 percent). The latter is seen ticking lower for a second consecutive month, albeit modestly so.

On balance, outcomes in line with consensus forecasts are unlikely to materially alter the baseline scenario calling for a $10-15 billion cutback in asset purchases, yielding an inconclusive end to the trading week. News-flow that tops economists’ forecasts and thereby argues in favor of a sustained QE reduction cycle beyond September and into the end of the year is likely to weigh on risk appetite – punishing sentiment-geared crude oil and copper prices – while eroding anti-fiat demand for gold and silver. A soft set of figures stands to yield the opposite dynamic.

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CRUDE OIL TECHNICAL ANALYSIS Prices declined as expected after putting in a bearish Dark Cloud Cover candlestick pattern. Near-term support is now at 105.93, the 23.6% Fibonacci retracement, with a break below that targeting the bottom of a rising channel set from early July (now at 104.28). Channel resistance is at 110.64.

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Commodities_Gold_Crude_Oil_Eye_US_Data_as_Fed_Taper_Speculation_Swells_body_Picture_3.png, Gold, Crude Oil Eye US Data as Fed Taper Speculation Swells

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD TECHNICAL ANALYSIS Prices broke below the bottom of a rising channel set from late-June and cleared the 1343.73-47.52 region marked by a horizontal pivot as well as the 14.6% Fibonacci expansion. Sellers now aim to challenge the 23.6% level at 1288.32. Alternatively, a reversal back above 1347.52 opens the door for a retest of the channel bottom, now at 1363.72.

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Commodities_Gold_Crude_Oil_Eye_US_Data_as_Fed_Taper_Speculation_Swells_body_Picture_4.png, Gold, Crude Oil Eye US Data as Fed Taper Speculation Swells

Daily Chart - Created Using FXCM Marketscope 2.0

SILVER TECHNICAL ANALYSIS Prices dropped back a downward sloping pivot line that has acted as an oscillation axis since November 2012, exposing the 23.6% Fibonacci expansion at 21.04. A further break beneath that targets the 38.2% level at 18.54. Trend line resistance is now at 22.56.

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Commodities_Gold_Crude_Oil_Eye_US_Data_as_Fed_Taper_Speculation_Swells_body_Picture_5.png, Gold, Crude Oil Eye US Data as Fed Taper Speculation Swells

Daily Chart - Created Using FXCM Marketscope 2.0

COPPER TECHNICAL ANALYSISPrices pulled back as expected, taking out support at 3.233 marked by the 38.2% Fibonacci retracement to expose the 50% level at 3.186. A further push beneath that eyes the 61.8% level at 3.138. The 3.233 level has been recast as near-term resistance.

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Commodities_Gold_Crude_Oil_Eye_US_Data_as_Fed_Taper_Speculation_Swells_body_Picture_6.png, Gold, Crude Oil Eye US Data as Fed Taper Speculation Swells

Daily Chart - Created Using FXCM Marketscope 2.0

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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