Gold May Rise as Crude Oil Declines on US Data

DailyFX

Crude oil may fall amid deterioration in risk appetite while gold gains on Fed QE continuity bets if US data points to slowing economic growth.

Talking Points

  • Gold, Silver Prices May Rise as Soft US Economic Data Underpins QE Outlook
  • Crude Oil and Copper at Risk if Signs of Slowing US Growth Sink Risk Trends

Commodity prices are little-changed ahead of the US trading session as traders look past a lackluster calendar of European event risk to focus on the US data docket. The March Retail Sales report is expected to show receipts stalled after rising 1.1 percent in February, yielding the weakest result in five months. Meanwhile, the Producer Price Index gauge for the same period is forecast to show wholesale inflation slowed over the same period while April’s preliminary Consumer Confidence reading from the University of Michigan ticks narrowly downward. On balance, a soft outing is likely to scatter expectations for a tapering of Fed QE efforts and boost demand for goldand silver amid renewed US Dollar dilution fears. Crude oil and copper may follow stocks lower however as growth slowdown jitters fuel risk aversion.

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WTI Crude Oil (NY Close): $93.51 // -1.13 // -1.19%

Prices put in a Bearish Engulfing candlestick pattern below resistance at the underside of a previously broken rising trend line set from the March 4 low, hinting a move lower is ahead. Near-term support is at 93.44, the 23.6% Fibonacci expansion, with a break below that exposing the 38.2% level at 92.61. A move back above the April 10 high at 94.79 eyes the trend line (now at 95.24) anew.

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Commodities_Gold_May_Rise_as_Crude_Oil_Declines_on_US_Data_body_Picture_3.png, Gold May Rise as Crude Oil Declines on US Data

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1561.45 // +2.91 // +0.19%

Prices recoiled from resistance at 1586.48, the 23.6% Fibonacci expansion, taking out support at 1565.69 marked by the 38.2% level. Sellers now aim to challenge the 50% Fib at 1458.89, with a drop below that eyeing the 61.8% expansion at 1532.09. Alternatively, a reversal back above 1565.69 exposes 1586.48 anew.

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Commodities_Gold_May_Rise_as_Crude_Oil_Declines_on_US_Data_body_Picture_4.png, Gold May Rise as Crude Oil Declines on US Data

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Silver (NY Close): $27.65 // +0.03 // +0.10%

Prices rebounded as expected, completing a bullish Morning Star candlestick pattern and taking out resistance at 27.48, the 14.6% Fibonacci expansion. The bulls are now challenging the 23.6% level at 28.01, with a further push above that aiming for the 38.2% mark at 28.86. The 27.48 level has been recast as near-term support. A turn back beneath that eyes the April 4 low at 26.63.

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Commodities_Gold_May_Rise_as_Crude_Oil_Declines_on_US_Data_body_Picture_5.png, Gold May Rise as Crude Oil Declines on US Data

Daily Chart - Created Using FXCM Marketscope 2.0

COMEX E-Mini Copper (NY Close): $3.434 // +0.016 // +0.47%

Prices are stalling after an expected rebound. Sellers are testing below resistance-turned-support at 3.420, the 23.6% Fibonacci retracement, with a break below that eyeing the 14.6% level at 3.376. Near-term resistance is marked by the 38.2% retracement at 3.491.

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Commodities_Gold_May_Rise_as_Crude_Oil_Declines_on_US_Data_body_Picture_6.png, Gold May Rise as Crude Oil Declines on US 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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