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Commodities: Crude Oil, Gold Aim Higher on “Fiscal Cliff” Deal Hopes

Commodities: Crude Oil, Gold Aim Higher on “Fiscal Cliff” Deal Hopes

2012-11-29 13:01:00
Ilya Spivak, Head Strategist, APAC
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Crude oil and gold prices are on the upswing on optimism about a resolution to the US “fiscal cliff” debacle on the horizon. S&P 500 futures hint more of the same ahead.

Talking Points

  • Crude Oil, Copper Follow Stocks Higher on “Fiscal Cliff” Deal Hopes
  • Gold and Silver Find Support in Ebbing Haven Demand for US Dollar

Commodities are on the upswing as risk appetite swells across financial markets, with the newswires citing optimism about a resolution to the US “fiscal cliff” debacle on the horizon. Investors turned cheery after Republican House of Representatives Speaker John Boehner said he was optimistic about the possibilities of a compromise on the heels of similarly conciliatory comments from President Obama, who expressed a hope to get the deal done before Christmas.

Sentiment-linked crude oil and copper prices are following shares higher. Meanwhile, gold and silver are finding de-facto support as the risk-on mood saps haven demand for the US Dollar. S&P 500 stock index futures are pointing firmly higher head of the opening bell on Wall Street, hinting more of the same is likely as North American markets come online.

On the economic data front, the third revision of third-quarter US GDP figures is unlikely to yield much impetus for volatility absent a major divergence with prior estimates. This puts the spotlight on October’s Pending Home Sales report and the November’s Kansas City Fed manufacturing survey. Improvements expected on both fronts, which may reinforce traders’ rosy outlook absent significant downside surprises.

WTI Crude Oil (NY Close): $86.49 // -0.69 // -0.79%

Prices broke support at a rising trend line support set from mid-October to expose the November 7 low at 84.04 as the next downside objective. A push below that initially exposes the 80-50-81.43 area. Alternatively, a reversal back above the trend line (now at 87.42) targets the 23.6% Fibonacci expansion at 89.48.

Commodities_Crude_Oil_Gold_Aim_Higher_on_Fiscal_Cliff_Deal_Hopes_body_Picture_4.png, Commodities: Crude Oil, Gold Aim Higher on “Fiscal Cliff” Deal Hopes

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1719.75 // -22.40 // -1.29%

Prices turned lower after putting in a Bearish Engulfing candlestick pattern below the 61.8% Fibonacci retracement (1748.70), dropping to test the 38.2% level at 1719.60. A further push downward below that exposes the 23.6% Fib at 1701.60, a barrier reinforced by a rising trend line set from late June (now at 1697.29). Near-term resistance lines up at 1734.15, the 50% retracement.

Commodities_Crude_Oil_Gold_Aim_Higher_on_Fiscal_Cliff_Deal_Hopes_body_Picture_3.png, Commodities: Crude Oil, Gold Aim Higher on “Fiscal Cliff” Deal Hopes

Daily Chart - Created Using FXCM Marketscope 2.0

Want to learn more about RSI? Watch this Video

Spot Silver (NY Close): $33.76 // -0.30 // -0.88%

Prices are testing resistance at 34.18, the 38.2% Fibonacci expansion. A break above that exposes the 50% level at 35.29. Near-term rising trend line support is at 33.43 and is reinforced by the 23.6% Fib at 32.84. A drop below the latter level aims for the November 5 low at 30.65.

Commodities_Crude_Oil_Gold_Aim_Higher_on_Fiscal_Cliff_Deal_Hopes_body_Picture_2.png, Commodities: Crude Oil, Gold Aim Higher on “Fiscal Cliff” Deal Hopes

Daily Chart - Created Using FXCM Marketscope 2.0

Want to learn more about RSI? Watch this Video

COMEX E-Mini Copper (NY Close): $3.538 // -0.014 // -0.39%

Prices are testing above resistance at 3.540, the 38.2% Fibonacci retracement and aiming to challenge the 50% Fib at 3.588.A break above the latter level exposes the 61.8% Fib at 3.625. Initial support lines up at 3.487, the 23.6% level, with a drop below that aiming for rising trend line support at 3.415.

Commodities_Crude_Oil_Gold_Aim_Higher_on_Fiscal_Cliff_Deal_Hopes_body_Picture_1.png, Commodities: Crude Oil, Gold Aim Higher on “Fiscal Cliff” Deal Hopes

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

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