- Crude Oil Bounce with Risk Appetite Likely to Prove
- Gold, Silver Outlook Hinges on Wednesday's FOMC
WTI Crude Oil (NY Close): $85.70 // -2.26 // -2.57%
Crude prices remain closely correlated to the S&P 500, with
strong gains in futures tracking the benchmark stock index ahead of
the opening bell on Wall Street corresponding with gains in the WTI
contract and pointing the way higher in North American trade.
Augusts' US Housing Starts and Building Permits figures headline a
quiet day for economic data, with a second consecutive month of
losses expected on both fronts. The preliminary API set of weekly
inventory figures is also on tap.
The spotlight is likely to focus on the Federal Reserve however
as policymakers begin a two-day meeting of the rate-setting FOMC.
Current optimism likely centers on hopes that Ben Bernanke and
company will unveil another round of aggressive stimulus, an
outcome we see as unlikely
, suggesting the upswing is a corrective affair before selling
The technical picture seems to reinforce the case for
forthcoming losses. Prices found interim support above $84.61, the
intersection of the 23.6% Fibonacci extension and the bottom of a
Flag chart formation, with resistance lining up at a channel top
set from early May. Broadly speaking, the Flag setup points to
bearish continuation, with the resumption of the down move
confirmed on a break below the pattern's bottom.
Spot Gold (NY Close): 17 7 8. 68 // -3 3 . 20 // -1. 83 %
The upswing in S&P 500 futures would be expected to point
the way lower for gold prices, and yet the metal is ticking higher
before the trading open in New York. The disparity seems to be
attributed to the focus on the outcome of the FOMC policy meeting,
with hopes for further stimulus translating into renewed demand for
gold as an alternative store of value.
A major directional breakout seems unlikely until Wednesday when
the Fed unveils the outcome of the sit-down, but the technical
picture continues to argue for a double top below the $1900/oz
figure marked by a pair of Bearish Engulfing candlestick patterns.
Near-term support lines up in the $1702.90-1745.25 range, while
resistance is found at a falling trend line connecting major highs
since the September 6 swing top (now at $1805.85).
Spot Silver (NY Close): $ 39. 67 // - 1 . 03 // -2. 53%
As with gold, silver seems to be backing away from trading as a
strict safe haven asset ahead of the Federal Reserve monetary
policy decision, with the metal's fate unlikely to be decided until
the announcement crosses the wires on Wednesday. In the meantime,
interim support lines up at $38.73, while Fibonacci extension
resistance stands at $40.01, $40.65 and $41.29.
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