Commodity markets are likely to see a quiet end to the short
trading week as investors wait for cues from the weekend's fiscal
cliff talks for direction cues.
Talking Points
- Commodities to See Muted Trade as Markets Wait for Fiscal
Cliff News
- Last-Minute Budget Deal Likely to May Boost Crude Oil, Gold
Prices
The spotlight remains on Washington, DC as financial markets
return from the Christmas holiday, where US policymakers have a
mere five days left to deliver a deal avoiding the so-called
"fiscal cliff", a set of tax hikes and government spending cuts due
to trigger at the turn of the year . T he Congressional Budget
Office (CBO) projects the jolt of austerity will tip the US back
into recession.
Critically, the
key inflection points are due over the weekend
. This means traders may hold off on committing to a firm
directional bias in the meantime. On balance, that seems likely to
make for a quiet end to the trading week. With that in mind, the
markets' hyper-sensitivity to headlines coupled with thin
holiday-season liquidity may make for choppy trade.
For commodity markets, a fiscal cliff deal portends an uptick in
cycle-sensitive crude oil and copper prices. Gold and silver may
likewise find near-term support amid ebbing haven demand for the US
Dollar. On the economic data front, November's US Pending Home
Sales figures headline the docket. December's Chicago PMI print is
also on tap.
WTI Crude Oil (NY Close): $90.87 // -0.11 // -0.12%
Prices are testing resistance in the 91.22-39 area, marked by
the 61.8% Fibonacci expansion and the top of a rising channel set
from early November. A Doji candlestick points to indecision and
hints a pullback may be ahead. Support is at 90.60, the 50% Fib,
with a drop below that exposing the 38.2% expansion at 89.97.
Alternatively, a break higher targets the 76.4% level squarely at
the 92.00 figure.
Daily Chart - Created Using FXCM Marketscope 2.0
Spot Gold (NY Close): $16 64 . 26 // + 4 . 51 // +0. 27 %
Prices mounted a shallow recovery from support at 1630.97,
marked by the 100% Fibonacci expansion and reinforced by the bottom
of a falling channel set from mid-September. Buyers have now edged
above the 76.4% expansion at 1659.90, exposing the 61.8% mark at
1677.84. The 1659.90 level has been recast as support, with a turn
back below that targeting 1630.97 anew.
Daily Chart - Created Using FXCM Marketscope 2.0
Want to learn more about RSI?
Watch this Video
Spot Silver (NY Close): $30. 17 // +0. 16 // +0. 54 %
Prices are stalling after breaking through support at 30.78, the
76.4% Fibonacci expansion. Near-term support is now at 29.66, the
100% level, with a break below that exposing the 123.6% expansion
at 28.55. The 30.78 level has been recast as near-term resistance.
A reversal back above that targets the 61.8% level at 31.47.
Daily Chart - Created Using FXCM Marketscope 2.0
Want to learn more about RSI?
Watch this Video
COMEX E-Mini Copper (NY Close) : $3. 602 // +0.0 04 // + 0 . 11
%
Prices are testing above resistance at 3.596, the 23.6%
Fibonacci expansion. A break higher exposes the 38.2% level at
3.643. Near-term support is at 3.522, the December 20 low, with a
decline below that aiming for a rising trend line at 3.453.
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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