Gold Sold on Demand Drop, Oil Down on US Jobs Data

DailyFX

Gold continues to sink as a plunge in ETF bullion holdings points to ebbing investment demand. Crude oil is down after a disappointing round of US employment figures.

Talking Points

  • Gold Continues to Sink on Slumping Investor Demand, Silver Follows
  • Crude Oil, Copper Tumble on Disappointing US Employment Data

Gold prices continue to sink amid signs of unwinding investment demand after ETF bullion holdings fell 0.4 percent yesterday, marketing the largest daily drop in five weeks and hitting the lowest level since late August of last year. Silver is following its more expensive counterpart in a move that seems to reflect a general unwinding of demand for anti-fiat assets.

Sentiment-sensitive crude oil and copper prices are racing lower tracking a sharp drop in S&P 500 futures. The break out in risk aversion follows a disappointing round of US employment data. The Challenger Job Cuts gauge showed corporate layoffs increased at an annual pace of 30 percent in March, marking a four-month high. Shortly thereafter, Initial Jobless Claims unexpectedly soared to the highest level since late-November at 385,000. Taken together, the figures compounded worries about a disappointing result on tomorrow’s Nonfarm Payrolls print.

Looking ahead, the near-term outlook is somewhat clouded. Although S&P 500 index futures have turned sharply lower, on net they are trading little-changed. Overnight gains have been erased but a push into negative territory has not materialized. The spotlight now turns to Fed commentary with Dallas branch President Fisher, Kansas City President George, and Vice Chair Yellen all scheduled to speak. On balance, a bit of consolidation may be in order near current levels for the remainder of the day as traders dig in their heels ahead of Friday’s event risk.

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WTI Crude Oil (NY Close): $94.45 // -2.74 // -2.82%

Prices are testing support at 94.47, the 38.2% Fibonacci retracement, with a break below that targeting the 50% level at 93.49. Near-term resistance is at 95.69, the 23.6% Fib. A reversal back above that eyes a falling trend line barrier at 97.54.

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Commodities_Gold_Sold_on_Demand_Drop_Oil_Down_on_US_Jobs_Data__body_Picture_3.png, Gold Sold on Demand Drop, Oil Down on US Jobs Data

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1557.95 // -17.95 // -1.14%

Prices broke support at 1562.58, the 38.2% Fibonacci expansion, exposing the 50% level at 1545.78. The 1562.58 level has been recast as near-term resistance, with a reversal back above that eyeing the 23.6% Fib at 1583.37.

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Commodities_Gold_Sold_on_Demand_Drop_Oil_Down_on_US_Jobs_Data__body_Picture_4.png, Gold Sold on Demand Drop, Oil Down on US Jobs Data

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Silver (NY Close): $27.00 // -0.28 // -1.02%

Prices broke support at 27.09, the 50% Fibonacci expansion, exposing the 61.8% level at 26.55. A break below that aims for the 76.4% Fib at 25.89. The 27.09 mark has been recast as near-term resistance, with a reversal back above that eyeing the 38.2% expansion at 27.62.

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Commodities_Gold_Sold_on_Demand_Drop_Oil_Down_on_US_Jobs_Data__body_Picture_5.png, Gold Sold on Demand Drop, Oil Down on US Jobs Data

Daily Chart - Created Using FXCM Marketscope 2.0

COMEX E-Mini Copper (NY Close): $3.334 // -0.044 // -1.30%

Prices broke support at 3.339, the 38.2% Fibonacci expansion, exposing the 50% level at 3.292. A further break beneath that aims for the 61.8% Fib at 3.244. The 3.339 level has been recast as near-term resistance, with a reversal back above that eyeing the 23.6% expansion at 3.398.

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Commodities_Gold_Sold_on_Demand_Drop_Oil_Down_on_US_Jobs_Data__body_Picture_6.png, Gold Sold on Demand Drop, Oil Down on US Jobs 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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