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Gold Flat, Crude Oil Cautiously Higher Before US Jobs Report

By , Currency Strategist
09 March 2012 09:42 GMT

Talking Points

  • Crude Oil, Copper Gain on Hopes US Recovery to Offset Eurozone Headwinds
  • Gold and Silver Flat as Prices Wait for US Jobs Data to Shape QE3 Outlook

Crude oil and copper prices are edging higher as markets await the closely-watched US employment report, where expectations call for the economy to add 210K jobs in February. While the outcome would mark a narrow slowdown from January, it would mark the strongest there-month period of employment growth since the first quarter of 2006. Investors are hoping that a pickup hiring will signal that firming US recovery has scope to offset headwinds facing global growth from recession in the Eurozone and a slowdown in China this year.

Precious metals’ performance is more muted, with gold and silver effectively flat. A relatively supportive US jobs growth outcome threatens to further erode expectations for a third round of quantitative easing from the Federal Reserve, denting store-of-value demand for metals as an alternative to fiat. An overnight rally in the US Dollar is likewise capping prices. The greenback rose against European currencies as regional growth concerns returned to the forefront upon completion of the Greek PSI bond swap agreement while the Yen fell after Finance Minister Jun Azumi hinted the BOJ would pursue further monetary easing.

WTI Crude Oil (NY Close): $106.58 // +0.42 // +0.40%

Prices continued higher after finding support at 104.38, the 38.2% Fibonacci retracement, with a break above the 23.6% level at 106.50. The bulls now aim to retest a formerly broken rising trend line set from the February 2 low, now at 108.30. The 23.6% Fib has been recast as near-term support.

Gold_Flat_Crude_Oil_Cautiously_Higher_Before_US_Jobs_Report_body_Picture_3.png, Gold Flat, Crude Oil Cautiously Higher Before US Jobs Report

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1699.77 // +14.80 // +0.88%

Prices are recovering from support in the 1662.10-167.05 region, with the bulls aiming to challenge 1719.76 from here. A break above this boundary exposes the December 2 high at 1763.00. Alternatively, a break lower initially exposes 1641.62, the December 21 wick high.

Gold_Flat_Crude_Oil_Cautiously_Higher_Before_US_Jobs_Report_body_Picture_4.png, Gold Flat, Crude Oil Cautiously Higher Before US Jobs Report

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Silver (NY Close): $33.87 // +0.45 // +1.34%

Prices are recovering from support in the 32.63-32.97 are marked by the February 16 low and the 38.2% Fibonacci retracement. Near-term resistance lines up at 34.59, the 23.6% Fib. On balance, overall positioning appears to favor the downside absent a daily close above 37.48, the February 29 high and peak of a Bearish Engulfing candlestick pattern.

Gold_Flat_Crude_Oil_Cautiously_Higher_Before_US_Jobs_Report_body_Picture_5.png, Gold Flat, Crude Oil Cautiously Higher Before US Jobs Report

Daily Chart - Created Using FXCM Marketscope 2.0

COMEX E-Mini Copper (NY Close): $3.792 // +0.024 // +0.64%

Prices are rebounding from support at 3.713, the would-be neckline of a Head and Shoulders top formation, to retest support-turned-resistance at a rising trend line set from mid-December now at 3.855. A break above that on a daily closing basis would expose the January 27 high at 3.938.

Gold_Flat_Crude_Oil_Cautiously_Higher_Before_US_Jobs_Report_body_Picture_6.png, Gold Flat, Crude Oil Cautiously Higher Before US Jobs Report

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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09 March 2012 09:42 GMT