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Crude Oil, Gold Recoveries Showing Early Signs of Exhaustion

Crude Oil, Gold Recoveries Showing Early Signs of Exhaustion

2011-09-28 05:50:00
Ilya Spivak, Sr. Currency Strategist
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Talking Points

  • Crude Oil Losses Hinted Ahead as S&P 500 Index Futures Decline
  • Gold, Silver May Take Direction Cues from Ben Bernanke Speech

WTI Crude Oil (NY Close): $84.45 // +4.21 // +5.25%

Crude oil prices bounced as expected amid a broad-based recovery in risk appetite. The rise may run into resistance going forward however as S&P 500 stock index futures point to weakness in late Asian trade, suggesting the correction may have run out of steam. Technically, the upside is capped by the 23.6% Fibonacci extension at $84.61, with a break above that targeting the top of a falling channel set from early May at $87.92. Near-term support stands at $80.97, the 38.2% Fib. US Durable Goods Orders figures headline the economic calendar, but the recent focus on EU debt woes hints that sentiment may get its bearing from the outcome of perennially “euro-skeptic” Finland’s vote on granting expanded powers to the EFSF bailout fund. Weekly DOE inventory data is also on tap while Fed Chairman Ben Bernanke will take to the wires.

Crude_Oil_Gold_Recoveries_Showing_Early_Signs_of_Exhaustion_body_Picture_3.png, Crude Oil, Gold Recoveries Showing Early Signs of Exhaustion

Spot Gold (NY Close): 1650.13 // +13.78 // +1.46%

Gold is inching lower overnight as the market-wide correction in post-FOMC moves seemingly begins to lose momentum. The upcoming speech from Ben Bernanke is likely to be the most market-moving bit of information to hit the tape over the coming 24 hours. Any clues alluding to the possibility that policymakers may yet opt to resume increasing the balance sheet in the event that growth remains disappointing are likely to stoke the yellow metal higher, while a strong indication that the Fed has moved on to other options would have the opposite effect. On the technical front, near-term support and resistance levels remain at $1624.09 and $1680.78, the 23.6% and 38.2% Fibonacci retracements respectively. A break lower exposes $1589.14.

Crude_Oil_Gold_Recoveries_Showing_Early_Signs_of_Exhaustion_body_Picture_4.png, Crude Oil, Gold Recoveries Showing Early Signs of Exhaustion

Spot Silver (NY Close): $31.91 // +1.17 // +3.80%

As with gold, the recovery in silver prices is running into resistance, with prices turning back from the 38.2% Fibonacci retracement at $32.66 to once again challenge the 23.6% level at $30.14. Also in line with its more expensive counterpart, the spotlight is on Ben Bernanke and the implications of his comments for Fed stimulus expectations. A break lower exposes $28.58.

Crude_Oil_Gold_Recoveries_Showing_Early_Signs_of_Exhaustion_body_Picture_5.png, Crude Oil, Gold Recoveries Showing Early Signs of Exhaustion

For real time news and analysis, please visit http://www.dailyfx.com/real_time_news

To receive future articles by email, please contact Ilya at ispivak@dailyfx.com

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