Crude Oil Following S&P 500 Lower, Gold Liquidation Gathers Steam
- Crude Oil Selling Continues as S&P 500 Leads Risky Assets Lower
- Gold Liquidation Gathers Steam After Fed Policy Announcement
WTI Crude Oil (NY Close): $80.51 // -5.41 // -6.30%
Prices took out the 38.2% Fibonacci extension support at $80.97 and are now testing the 50% level at $78.03, with sharp losses on S&P 500 stock index futures ahead of the opening bell on Wall Street pointing to continued selling as the WTI contact continues to fall in line with broad-based risk sentiment trends. A break below current support exposes the 61.8% Fib at $75.09, while the 38.2% level has been recast as near-term resistance.
Spot Gold (NY Close): 1740.13 // -42.22 // -2.37%
The selloff in the aftermath of Wednesday’s Federal Reserve policy announcement continues as the decision by Ben Bernanke and company to shy away from expanding the balance sheet saps demand for gold as an alternative store of value to would-be diluted fiat currencies. Prices are probing below the $1700 figure, a barrier reinforced by the 50% Fibonacci retracement level at $1695.05, with a daily close below the latter firmly validating the double top formation marked by two Bearish Engulfing patterns below the $1900/oz figure. Such an outcome implies a measured target near the $1500 mark over the coming weeks and months, though near-term support would be seen at $1643.83. For the time being, immediate resistance stands at $1746.26.
Spot Silver (NY Close): $35.87 // -3.81 // -9.61%
The forces driving silver prices mirror those guiding gold, though the cheaper metal’s lower liquidity parameters are greatly amplifying volatility to produce a much sharper selloff. The measured target implied by the Head and Shoulders setup below the $44.00 figure at $34.81 is being overshot, with prices now testing support at the May 12 low ($32.32). RSI studies point to deeply oversold conditions, hinting a bounce is becoming increasingly likely over the near term, but reading too much into such indicators given current momentum doesn’t seem prudent.
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