Crude Oil Little Changed in Choppy Trading, Gold Continues Lower
Commodities - Energy
Crude Oil Little Changed in Choppy Trading
Crude Oil (WTI) $72.24 +$0.26 +0.36%
Though prices moved in a three dollar range on Tuesday, crude oil ultimately finished little changed, as economic uncertainty kept buying interest limited. The ISM Services Index had a disappointing reading, coming in at 53.8 versus the 55.0 consensus estimate. Interestingly, oil and stock markets rallied early in the U.S. session despite the weak ISM figure, as a bit of bargain buying emerged, but that rally quickly gave way to renewed selling pressure.
Tomorrow will be a key indication of where risk assets, including crude oil, go from here. In bear markets, such assets typically sell off regardless of their oversold conditions. The fact that markets could not hold on to decent gains on Tuesday is a very negative sign. Should the financial markets continue lower tomorrow, look for oil to test levels under $70. Key technical levels remain the same, with support near $69.50 and resistance at $75.50. Oil has fallen for six sessions in a row.
Commodities - Metals
Gold Continues Lower
Gold $1193.75 +$1.13 +0.09%
Gold is following our playbook closely. After breaking down decisively last Thursday, prices attempted to rally slightly on bargain hunting, however, prices have now reversed course and are on track to test horizontal support near $1166. Momentum traders who helped propel gold to the recent all-time highs are now more cautious on the metal after witnessing last week’s plunge. Reduced demand from this segment of the trading community and the fact that some traders may feel more emboldened to short after the reversal, should contribute to further downside in gold.
Silver $17.82 -$0.01 -0.06%
Silver closed some of the gap between itself and gold on Tuesday. Last week, silver prices fell much more aggressively than gold prices, which caused the gold/silver ratio to increase to 68.25 from 65.76. The price action on Tuesday was just a reversal of some of that steep underperformance. If gold prices continue to fall, it is very likely that silver will follow suit.
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