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Commodities: Oil, Gold Likely to Wait for US Jobs Data for Clear Cues

By , Currency Strategist
06 December 2012 12:00 GMT

Commodities are under pressure ahead of the opening bell on Wall Street but clear-cut directional conviction is likely to wait until Friday’s US jobs report.

Talking Points

  • Metals Under Pressure but Firm Conviction Unlikely Before US Jobs Data
  • Crude Oil Weakness May Reflect Reduction in Geopolitical Risk Premium

Commodities are under pressure in European trade ahead of the opening bell on Wall Street. Firm directional conviction seems absent for now however and the relative quiet is likely to carry forward was traders hold off on committing to a clear-cut directional bias ahead of Friday’s closely-watched US Employment data. Indeed, S&P 500 futures are trading effectively flat, suggesting the selloff does not have a firm grounding in risk appetite trends.

In that context, current weakness in most benchmark commodity prices seems broadly corrective after yesterday’s gains. Crude oil is a notable exception, where a third day of losses may reflect a reduction in geopolitical risk premium amid news of calming tension in Egypt. Negotiations surrounding a deal to avoid the US “fiscal cliff” remain a wild-card. Signs of progress on a compromise are likely to be supportive for sentiment as well as commodity prices, and vice versa.

WTI Crude Oil (NY Close): $87.86 // -0.49 // -0.01%

Prices put in a Shooting Star candlestick below resistance at the 23.6% Fibonacci expansion (89.48), a barrier reinforced by a minor rising channel top at 90.60, hinting a move lower is ahead. Near-term support is at 87.42, the 14.6% Fib, with a break below that exposing the channel bottom at 85.61 as well as the November 7 low at 84.04. Alternatively a break above 90.60 exposes the 38.2% expansion at 92.87.

Commodities_Oil_Gold_Likely_to_Wait_for_US_Jobs_Data_for_Clear_Cues_body_Picture_4.png, Commodities: Oil, Gold Likely to Wait for US Jobs Data for Clear Cues

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1693.65 // -3.51 // -0.00%

Prices broke lower as expected after putting in a Bearish Engulfing candlestick pattern, taking out support at a rising trend line set from late June. Sellers now aim to challenge the November 5 low at 1672.50. The trend line (now at 1708.59) has been recast as resistance, with a push back above that aiming to challenge 1752.55.

Commodities_Oil_Gold_Likely_to_Wait_for_US_Jobs_Data_for_Clear_Cues_body_Picture_3.png, Commodities: Oil, Gold Likely to Wait for US Jobs Data for Clear Cues

Daily Chart - Created Using FXCM Marketscope 2.0

Want to learn more about RSI? Watch this Video

Spot Silver (NY Close): $32.87 // -0.05 // -0.06%

Prices broke support at the 23.6% Fibonacci expansion (33.28), exposing the 38.2% barrier at 32.59. The 33.28 level has been recast as resistance. A reversal back above that eyes channel support-turned-resistance now at the 34.16 figure.

Commodities_Oil_Gold_Likely_to_Wait_for_US_Jobs_Data_for_Clear_Cues_body_Picture_2.png, Commodities: Oil, Gold Likely to Wait for US Jobs Data for Clear Cues

Daily Chart - Created Using FXCM Marketscope 2.0

Want to learn more about RSI? Watch this Video

COMEX E-Mini Copper (NY Close): $3.677 // +0.020 // +0.03%

Prices are testing resistance at 3.676, the 50% Fibonacci expansion, having edged above a falling trend line set from the September 14 swing high. A break higher targets the 61.8% level at 3.742. Trend line resistance-turned-support is now at 3.654, with a drop below that targeting the 38.2% expansion at 3.612.

Commodities_Oil_Gold_Likely_to_Wait_for_US_Jobs_Data_for_Clear_Cues_body_Picture_1.png, Commodities: Oil, Gold Likely to Wait for US Jobs Data for Clear Cues

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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06 December 2012 12:00 GMT