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Gold May Fall as Crude Oil Gains on US Consumer Confidence Data

By , Currency Analyst
17 January 2014 07:32 GMT

Talking Points:

  • Commodities reverse on profit taking amidst lack of supportive news flow
  • Upcoming UofM Consumer Confidence data may help reignite gold selloff
  • Crude oil continues to find buyer support near the $94.00/barrel figure

Gold and crudeoil failed to build on recent momentum following the release of December’sUS CPI figures, which posted in-line with expectations. Traders had been spurred on by positive economic news flow and pro-taper bets during the past few trading sessions. Without a new catalyst, commodities were subjected to profit-taking by investors.

Looking ahead, traders will turn their attention to the University of Michigan Consumer Confidence reading, which is tipped to tick higher. A better-than-expected print would be a positive sign for the world’s largest economy, which is highly dependent on consumer spending as a source of economic growth. An upside surprise may act to reignite risk appetite and strengthen demand for oil, while reaffirming pro-taper bets which would weigh on gold prices.

The DailyFX Speculative Sentiment Index is providing a mixed bias on gold based on trader positioning.

CRUDE OIL TECHNICAL ANALYSIS Oil has managed to hold above the US$94 handle which may act as support for the commodity in the session ahead. The Piercing Line candlestick formation above 91.20 has hinted at some further strength for crude. However, selling pressure around the 38.2% Fib retracement level (94.85) may restrain further gains.

Gold_May_Fall_as_Crude_Oil_Gains_on_US_Consumer_Confidence_Data_body_Picture_5.png, Gold May Fall as Crude Oil Gains on US Consumer Confidence Data

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD TECHNICAL ANALYSIS Despite a recent flat trading session, gold is still showing several bullish technical signals on the daily including a break of the descending trend channel and move above the 20 SMA. Selling pressure around 1,256 is acting as near-term resistance and support rests at the 1,218 mark.

Gold_May_Fall_as_Crude_Oil_Gains_on_US_Consumer_Confidence_Data_body_Picture_6.png, Gold May Fall as Crude Oil Gains on US Consumer Confidence Data

Daily Chart - Created Using FXCM Marketscope 2.0

SILVER TECHNICAL ANALYSIS Volatility remains subdued in silver as price action continues to be confined between support at 19 and resistance at 20.48 (the 38.2% Fib retracement level). Range trading strategies are favoured while the commodity continues to drift sideways.

Gold_May_Fall_as_Crude_Oil_Gains_on_US_Consumer_Confidence_Data_body_Picture_7.png, Gold May Fall as Crude Oil Gains on US Consumer Confidence Data

Daily Chart - Created Using FXCM Marketscope 2.0

COPPER TECHNICAL ANALYSIS The copper price continues to waver around the 20 SMA as the commodity searches for direction. Momentum is shifting to the downside as signaled by the declining rate of change indicator. However a Piercing Line candlestick formation is hinting at an upside bounce. This leaves a mixed technical bias for the copper.

Gold_May_Fall_as_Crude_Oil_Gains_on_US_Consumer_Confidence_Data_body_Picture_8.png, Gold May Fall as Crude Oil Gains on US Consumer Confidence Data

Daily Chart - Created Using FXCM Marketscope 2.0

--- Written by David de Ferranti, Market Analyst, FXCM Australia

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17 January 2014 07:32 GMT