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Crude Oil Gains on Central Bank Stimulus Hopes, Gold Treading Water

By , Currency Strategist
15 June 2012 10:38 GMT

Talking Points

  • Crude Oil, Copper Rise on Hopes for Coordinated Central Bank Stimulus
  • Gold and Silver Consolidate, Waiting for Greek Election for Direction Cues

Crude oil and copper prices are on the upswing amid as risk appetite firms across financial markets following reports thatcentral banks are preparing to step in to stabilize financial marketsif the weekend’s much-feared Greek election outcome generates widespread dislocation. Reuters cited a G20 cited official saying the world’s top monetary authorities would provide liquidity if credit conditions seize up while BOEGovernor Mervyn King unveiled a credit-easing program meant to feed funding to UK banks set to launch next week.Gold and silver are treading water, unwilling to decline Greece-linked jitters linger but lacking the acute panic needed to fuel a rally.

S&P 500 stock index futures are pointing higher ahead of the opening bell on Wall Street, but the risk of liquidation remains high as traders turn defensive into the close of the trading week. The US economic data docket may prove to be the catalyst for a turn-around in sentiment. The University of Michigan gauge of consumer confidence is expected to tick lower and New York State manufacturing activity slows in June. Industrial Production is likewise forecast to decelerate. Such an outcome promises to reboot demand for haven assets, pushing the US Dollar higher.

WTI Crude Oil (NY Close): $83.91 // +1.29 // +1.56%

Prices broke higher after putting in a bullish Piercing Line candlestick pattern above support at 81.07, the 23.6% Fibonacci expansion, as expected. The bulls now aim to challenge the June 7 high at the 87.00 figure. The 14.6% Fib at 83.30 has been recast as near-term support.

Crude_Oil_Gains_on_Central_Bank_Stimulus_Hopes_Gold_Treading_Water_body_Picture_3.png, Crude Oil Gains on Central Bank Stimulus Hopes, Gold Treading Water

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1623.73 // +6.67 // +0.41%

Prices broke above major resistance at a falling trend line set from early March. Buyers now aim to challenge the 76.4%Fibonacci retracementat 1637.35, with a break higher targeting the May 1 high at 1671.49. The 61.8% Fib at 1616.23 has been recast as near-term support.

Crude_Oil_Gains_on_Central_Bank_Stimulus_Hopes_Gold_Treading_Water_body_Picture_4.png, Crude Oil Gains on Central Bank Stimulus Hopes, Gold Treading Water

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Silver (NY Close): $28.64 // -0.18 // -0.63%

Prices continue to trace out a Flag chart formation, a setup indicative of bearish continuation. Confirmation is required on a daily close below the pattern’s bottom – now at 28.32 – which would expose 27.06 as the next downside objective. The first layer of major resistance lines up at 29.71.

Crude_Oil_Gains_on_Central_Bank_Stimulus_Hopes_Gold_Treading_Water_body_Picture_5.png, Crude Oil Gains on Central Bank Stimulus Hopes, Gold Treading Water

Daily Chart - Created Using FXCM Marketscope 2.0

COMEX E-Mini Copper (NY Close): $3.354 // +0.014 // +0.42%

Prices continue to tread water below resistance at 3.384, the 23.6% Fibonacci retracement. A break above this boundary targets the 38.2% Fib at 3.474. Double bottom support comes in at 3.250.

Crude_Oil_Gains_on_Central_Bank_Stimulus_Hopes_Gold_Treading_Water_body_Picture_6.png, Crude Oil Gains on Central Bank Stimulus Hopes, Gold Treading Water

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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15 June 2012 10:38 GMT