Crude Oil Pressured Lower While Gold Recovers as Stocks Stumble

Talking Points

  • Crude Oil Rebound Threatened as S&P 500 Futures Point Lower
  • Gold to Bounce After Dramatic Selloff as Safety Demand Returns

WTI Crude Oil (NY Close): $8 5 . 44 // + 1 . 32 // + 1 . 57 %

Economic data is taking a back seat to building speculation about the outcome of Fed Chairman Ben Bernanke's speech on Friday, with traders hoping for another round of stimulus as the global recovery falters. Indeed, a broadly growth-negative (albeit somewhat better than expected) European data set and a disappointing Richmond Fed manufacturing survey didn't prevent share s from a sharp rally yesterday, taking crude along for the ride.

With that in mind, S&P 500 stock index futures are pointing aggressively lower ahead of the US trading day , hinting that a pullback is likely this time around as traders unwilling to commit to a directional bias before Friday's event risk take profits after yesterday's advance. The US Durable Goods Orders report headlines the economic docket . The official set of weekly inventory numbers from the DOE is also on tap.

Prices took out resistance at $85.32, the 14.6% Fibonacci extension level, with the door now open for an advance to the 50% retracement of the decline from the late July swing high at $88.15. The 14.6% Fib has been recast as near-term support.

Spot Gold (NY Close): 1828.35 // -69.25 // -3.65%

Yesterday's bounce in risk appetite weighed heavily on gold as safe-haven flows dried up, but a rebound seems likely today with S&P 500 futures pointing aggressively ahead of the opening bell on Wall Street. Choppy trade is likely to continue into Friday, but it will be most interesting to see how the metal will actually react in the aftermath of Bernanke's anticipated speech at Jackson Hole.

If the Fed chairman announces further stimulus, that stands to boost inflation expectations and drive gold as a hedge against the devaluation of paper currencies, mirroring the dynamic witnessed last year with QE2 and pushing the metal higher alongside stocks. Naturally, this runs counter to the metal's current trading dynamics, wherein it behaves as a safe-haven. Conceivably, this also means that if the inflation discussion takes center stage again and no "QE3" is unveiled, gold may fall with stocks as well.

Prices put in a dramatic Bearish Engulfing candlestick pattern below the $1900/oz figure and descended to support at the intersection of a rising trend line and the 23.6% Fibonacci retracement level ($1809.48). A break below this barrier exposes the 38.2% level at $1746.19, while initial resistance lines up at $1848.49.

Spot Silver (NY Close): $41.92 // -1.84 // -4.21%

In a similar setup to gold, prices put in an aggressive Bearish Engulfing candlestick pattern below Andrew's Pitchfork resistance and pulled back to its midline, a barrier reinforced by the 38.2% Fibonacci retracement at $41.45. The overnight drop in S&P 500 futures hints a correction higher is ahead as safe-haven flows return, with initial resistance seen at 23.6% Fib ($42.50).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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