Oil and Gold Technical Setup Favors Losses, Risk Trends and US CPI Likely Triggers
Commodities - Energy
Oil Technical Setup Favors Losses, Risk Trends the Likely Catalyst
Crude Oil (WTI) $82.43 -$0.50 -0.60%
Technical positioning argues for a turn lower after prices put in a Hanging Man candlestick followed by bearish confirmation on the close of the next bar after a test of support-turned-resistance at a rising trend line established from the swing bottom in early February. A supportive economic calendar may complicate things for the bears however, with US initial jobless claims set to decline for a third week while the Philadelphia Fed’s manufacturing sentiment index advances to 18.0 in March from 17.6 in the previous month. Fading risk appetite may be enough to drive prices lower however as the correlation between crude and the MSCI World Stock Index remains potent at 0.77, hinting that losses across all major European bourses as well US stock index futures will create a supportive environment for sellers. Near-term support is seen in the $79.32-$80.28 region, with a break below that exposing $77.53.
Commodities - Metals
Gold Technical Setup Bearish, US CPI May Trigger Selloff
Gold $1125.65 +$5.30 +0.47%
The technical setup is similar to oil, with prices showing an Inverted Hammer bearish reversal candlestick along with confirmation on the following bar after a test of resistance at support-turned-resistance marked by a rising trend line set from the swing low in early February. The economic calendar looks supportive of a bearish scenario with US CPI figures expected to show the annual pace of core inflation slowed to 1.4%, matching a five-year low originally set in August of last year. The apparent absence of meaningful upward pressure on the price level is likely to weigh on inflation hedge demand, sending precious metals broadly lower.
Silver $17.50 +$0.40 + 0.23%
The outlook for silver is largely in line with that of gold as lackluster US CPI readings promise to weigh on metal prices. Prices are treading water below range resistance at $17.52, with a push lower seeing initial support at $16.93.
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