Jackson Hole Summit in Focus for Gold, Crude Oil Prices
Commodity prices are looking to commentary from the Fed’s Jackson Hole Economic Summit for direction amid continued QE “taper” speculation.
Talking Points
Commodities Look to Jackson Hole Summit for Direction Cues Amid Fed Taper Speculation
Gold Technical Positioning Hints Prices May be Carving Out a Top Below the $1400/oz Figure
Commodity prices are little changed in the final hours of the trading week, with investors looking past supportive second-quarter revisions to UK and German GDP to focus on the US data docket. July’s New Home Sales report is on tap, with a pullback to 487K expected after the metric hit a five-year high at 497K in the prior month. A result in line with expectations would still fall firmly above the 12-month trend average (420K), suggesting traders ought to take it broadly in stride.
Commentary emerging from the first full day at the Jackson Hole Economic Summit is likely to dominate the spotlight. Janet Yellen, the Fed Vice Chair and a leading candidate to replace Ben Bernanke when his tenure ends in January 2014, will be in attendance. If chosen, it will be up to her to manage the Fed’s move toward monetary policy normalization. With that in mind, traders will be keen to hear what she has to say on the matter of QE “tapering”.
Hawkish overtones are likely to boost the US Dollar – applying de-facto downward pressure to precious metals –as well as punish risk-geared crude oil and copper. Alternatively, a dovish lean is likely to produce the opposite dynamic.
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CRUDE OIL TECHNICAL ANALYSIS – Prices declined after putting in a Bearish Engulfing candlestick pattern, taking out the bottom of a Triangle chart pattern to expose the 38.2% Fibonacci retracement at 102.70. A further push beneath that eyes the 50% level at 100.79. Alternatively, a turn back above the Triangle bottom (now at 105.18) aims for the formation’s upper boundary at 108.01.
Daily Chart - Created Using FXCM Marketscope 2.0
GOLD TECHNICAL ANALYSIS – Prices put in a bearish Dark Cloud Cover candlestick pattern below resistance at 1376.28, the 61.8% Fibonacci expansion, hinting a reversal lower may be ahead. Negative RSI divergence bolsters the case for a downside scenario. Near-term rising channel support is at 1366.30, followed by the 50% Fibat 1356.22. A break beneath the latter level targets the 38.2% level at 1336.76. Alternatively, a reversal above 1376.28 aims for the 76.4% expansion at 1400.72.
Daily Chart - Created Using FXCM Marketscope 2.0
SILVER TECHNICAL ANALYSIS – Prices recoiled downward from support-turned-resistance at a falling trend line set from November 2012 to retest the 23.6% Fibonacci retracement at 22.25. A break below that aims for the 14.6% level at 20.70. Alternatively, a reversal above the trend line (now at 23.11) exposes the 38.2% Fib at 24.75.
Daily Chart - Created Using FXCM Marketscope 2.0
COPPER TECHNICAL ANALYSIS – Prices are rebounding from support at 3.286, the 23.6%Fibonacci retracement, with the bulls eyeing triple-top resistance at 3.378 anew. This barrier is reinforced by the 23.6% Fib expansion at 3.379. A break upward initially targets the 38.2% expansion at 3.437. Alternatively, a reversal below support aims for the 38.2% retracement at 3.228.
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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