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Crude Oil and Gold Aim Lower on Global Slowdown Fears, Dollar Gains

Crude Oil and Gold Aim Lower on Global Slowdown Fears, Dollar Gains

2012-03-06 09:55:00
Ilya Spivak, Head Strategist, APAC
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Talking Points

Commodity prices continue to track lower – mirroring the trading dynamic we discussed yesterday – as the return of global economic slowdown fears drives risk aversion across financial markets. Growth-sensitive crude oil and copper prices are facing direct selling pressure, while gold and silver are under attack as souring sentiment stokes safe-haven demand for the US Dollar.

Looking ahead, more of the same looks likely as S&P 500 stock index futures point aggressively lower before the opening bell on Wall Street. The limited North American data docket is likewise supportive of current trends, with Canada’s Ivey PMI gauge is expected to show economic activity slowed in February to snap a three-month winning streak. The preliminary API set of weekly oil inventory numbers is also on tap.

WTI Crude Oil (NY Close): $106.72 // +0.02 // +0.02%

Prices are testing key support at 105.82, the 23.6% Fibonacci retracement level reinforced by a rising trend line set from the February 2 swing bottom, after putting in a bearish Three Outside Down candlestick pattern. Negative RSI divergence reinforces the case for a downside scenario. A daily close below 105.82 initially targets the 38.2% Fib at 103.28.

Crude_Oil_and_Gold_Aim_Lower_on_Global_Slowdown_Fears_Dollar_Gains_body_Picture_3.png, Crude Oil and Gold Aim Lower on Global Slowdown Fears, Dollar Gains

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1706.50 // -6.10 // -0.36%

Prices remain locked between 1687.97 and 1727.06, the 38.2% and 23.6% Fibonacci retracement levels, respectively. A daily close above resistance exposes the December 2 high at 1763.00 anew. Alternatively, a push through immediate support exposes the 50% level at 1656.38.

Crude_Oil_and_Gold_Aim_Lower_on_Global_Slowdown_Fears_Dollar_Gains_body_Picture_4.png, Crude Oil and Gold Aim Lower on Global Slowdown Fears, Dollar Gains

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Silver (NY Close): $33.98 // -0.81 // -2.33%

Prices broke support at 34.59, the 23.6% Fibonacci retracement, after completing a Bearish Engulfing candlestick pattern below resistance at 36.99. Sellers are now aiming to challenge the 38.2% Fib at 32.97, with a break below that exposing the 50% level at 31.67. The 23.6% retracement has been recast as near-term resistance.

Crude_Oil_and_Gold_Aim_Lower_on_Global_Slowdown_Fears_Dollar_Gains_body_Picture_5.png, Crude Oil and Gold Aim Lower on Global Slowdown Fears, Dollar Gains

Daily Chart - Created Using FXCM Marketscope 2.0

COMEX E-Mini Copper (NY Close): $3.860 // -0.044 // -1.13%

Copper is carving out a Head and Shoulders topping chart pattern below the 4.0 figure, although confirmation is required on a daily close below the formation’s neckline at 3.713. Prices are now testing through initial rising trend line support set from the December 15 swing low, with a break lower exposing the neckline as the next barrier. Near-term resistance remains at 3.947 for now.

Crude_Oil_and_Gold_Aim_Lower_on_Global_Slowdown_Fears_Dollar_Gains_body_Picture_6.png, Crude Oil and Gold Aim Lower on Global Slowdown Fears, Dollar Gains

Daily Chart - Created Using FXCM Marketscope 2.0

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak

To be added to Ilya's e-mail distribution list, send a note with subject line "Distribution List" to ispivak@dailyfx.com

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