Gold Under Fire Again Ahead of US Open, Crude Oil Set to Rise

Talking Points

  • Crude Oil to Capitalize as S&P 500 Futures Point to Risk Recovery
  • Gold Under Fire Again Ahead of US Open -Will Momentum Last?

WTI Crude Oil (NY Close): $84.12 // +1.86 // +2.26%

S&P 500 stock index futures are pointing aggressively higher ahead of the opening bell on Wall Street, hinting the WTI contract will continue to recover along with a broad-based improvement in risk appetite. With that in mind, yesterday's price action is an important cautionary tale for those expecting follow-though, as markets remain choppy and unwilling to commit until Friday's speech from Ben Bernanke at the Jackson Hole, Wyoming central bankers' summit.

In the near term, the Richmond Fed manufacturing survey is in focus, with expectations calling for the gauge to revisit the nine-month low set in May. The preliminary set of weekly crude inventory figures from the American Petroleum Institute (API) is also on tap.

The rebound from 38.2% Fibonacci extension support at $79.43 continues, with prices taking out the 23.6% Fib at $83.07 and now probing above the 14.6% level $85.32. Sustained upside pressure exposes the next layer of resistance at $88.15. The 23.6% Fib has been recast as near-term support.

Spot Gold (NY Close): 1 897 . 60 // + 45 . 50 // + 2 . 46 %

A formidable inverse correlation between gold and the S&P 500 argues for losses as futures tracking the US equity benchmark move aggressively higher, sapping safe-haven demand. With that in mind, similar positioning ahead of yesterday's Wall Street open didn't amount to much as sentiment reversed sharply lower ahead of the session close, so as with oil, reading too much into what is happening at the moment seems ill-advised. Indeed, meaningful follow-through will probably remain lacking until Friday.

Prices are turning sharply lower from resistance at an Andrew's pitchfork top, probing below resistance turned support at $1884.70 (the 76.4% Fibonacci extension level). Negative RSI divergence bolsters the case for a pullback. The boundary is reinforced by the pitchfork's midline, with a push lower targeting the 61.8% extension at $1853.80. Near-term resistance stands at $1917.63.

Spot Silver (NY Close): $ 42 . 91 // + 2 . 30 // + 5 . 67 %

Prices are reversing lower from resistance at $43.78, the intersection of the 76.4% Fibonacci extension level and an Andrew's Pitchfork top, with initial support seen at $42.48. As with gold, ebbing safe-haven demand appears likely to drive prices lower, but betting on sustained follow-through is probably asking for too much in the current environment.

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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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