Crude oil and gold prices may face selling pressure through the
week-end amid signs of continued deadlock as US officials struggle
to avert the looming "fiscal cliff".
Talking Points
- Crude Oil, Copper May Follow Stocks Lower on Lack of "Fiscal
Cliff" Progress
- Gold and Silver Vulnerable if Safe-Haven Demand Continues to
Buoy US Dollar
- US Industrial Production Data Unlikely to Yield Strong
Response from Markets
A quiet economic calendar through the end of the trading week
puts the spotlight on a rumored meeting between US President Barack
Obama and Congressional leaders as the "fiscal cliff" fiasco
continues to play out. With the election out of the way, the
re-elected Democratic president must cobble together a deal with a
divided Congress to avert the onset of steep tax hikes and spending
cuts due to be triggered at the turn of the calendar year. The
Congressional Budget Office (CBO) estimates that if the hefty dose
of austerity is allowed to proceed as-is, it stands to trim US GDP
growth by a hefty 0.6 percent in 2013, tipping the economy into
recession in the first half of the year.
In an environment where investors are hoping a firming US
recovery will help countervail headwinds from Europe and Asia, the
prospect of such a scenario is decidedly negative for market
sentiment. That means traders will closely monitor commentary from
US officials, with signs of persisting deadlock likely to amplify
risk-averse tendencies , sending cycle-sensitive crude oil and
copper prices lower along with equity indexes. Gold and silver are
at risk of following suit as the negative mood boosts haven demand
for the US Dollar , putting de-facto downward pressure on metals
denominated in terms of the benchmark currency. S&P 500 futures
are pointing cautiously lower in late overnight trade, reinforcing
the danger of a soft end to the trading week.
US Industrial Production data amounts to the last bit of
noteworthy risk on the docket. Expectations suggest output grew 0.2
percent in October. This would mark a slowdown from the 0.4 percent
increase recorded in the prior month but fall broadly in line with
the 12-month average at 0.23 percent, hinting a print in line with
expectations is unlikely to stir much by way of volatility.
WTI Crude Oil (NY Close): $85.45 // -0.87 // -1.01%
Prices continue to hover above the 50% Fibonacci expansion at
83.76. A break below that exposes 80.00 figure and the 61.8% level
at 7978. Resistance is at 86.67, marked by a falling trend line set
from the September 14 high and reinforced by the 38.2% Fib 87.66. A
push above that aims for the 90.00 figure and the 23.6% expansion
at 92.53.
Daily Chart - Created Using FXCM Marketscope 2.0
Spot Gold (NY Close): $17 15 . 80 // -10 . 55 // - 0. 61 %
Prices are turning lower resistance at 1732.33, the 23.6%
Fibonacci retracement. Near-term support is at 1693.06, the 38.2%
Fib, a barrier reinforced by a rising trend line set from late June
(now at 1688.55). A drop beneath the latter level targets the 50%
Fib at 1661.32. Alternatively, a push above resistance targets the
1790.55-1802.80 area
Daily Chart - Created Using FXCM Marketscope 2.0
Want to learn more about RSI?
Watch this Video
Spot Silver (NY Close): $32.63 // -0.58 // -0.18%
Prices edged above resistance at 32.36, the 38.2% Fibonacci
retracement, exposing the 33.51-66 area marked by the 23.6% level
and a former range bottom as the next upside objective. The 32.36
level has been recast as support, with a drop back below that
targeting the 38.2% Fib at 31.43.
Daily Chart - Created Using FXCM Marketscope 2.0
Want to learn more about RSI?
Watch this Video
COMEX E-Mini Copper (NY Close) : $3.462 // +0.008 // +0.23%
Prices are testing support at a rising trend line set from early
October 2011 (3.403). A break downward initially targets horizontal
support at 3.300. Near-term resistance is at 3.505, the 23.6%
Fibonacci retracement, with a piercing above that exposing the
38.2% level at 3.568.
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
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