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Gold, Oil Look to US Data Set to Guide Fed Outlook

Gold, Oil Look to US Data Set to Guide Fed Outlook

Ilya Spivak, Head Strategist, APAC

Gold and crude oil prices are looking to a busy US economic calendar to offer guidance to the Fed policy outlook and establish a bearing on sentiment trends.

Talking Points

  • Gold and Silver Prices Find Support as US Dollar Corrects Downward
  • Crude Oil, Copper Advance as Risk Appetite Firms in European Trade
  • US Data Set in Focus on Guide Sentiment Trends Via Fed Policy Bets

Commodity prices are on the upswing in European trading hours as risk appetite firms across the financial markets. Cycle-sensitive crude oil and copper prices are following shares higher while gold and silver have found support as the US Dollar corrects lower, offering a de-facto boost to anti-fiat assets. S&P 500 futures are pointing firmly higher ahead of the opening bell on Wall Street, hinting at more of the same as North American exchanges come online.

A busy US economic data docket is ahead. May’s Durable Goods Orders and New Home Sales as well as June’s Consumer Confidence numbers are due to cross the wires. Signs of moderation are expected on all fronts: durables orders is expected to slow; consumer confidence is seen edging lower after setting a five-year high in May; and home sales are forecast to post the smallest increase in three months.

Given investors’ acute focus on Fed monetary policy in the aftermath of last week’s FOMC announcement, data outcomes may be viewed through the prism of timing the onset of stimulus reduction. With that in mind, soft results that push back on fears of a near-term cutback in the size of QE asset purchases are likely to offer a further lift to risk-geared commodities and precious metals. Needless to say, upside surprises that bolster the case for tapering accommodation stand to yield the opposite result.

Crude Oil Technical Analysis (WTI)- Prices put in a bullish Piercing Line candlestick pattern above support at a rising trend line set from mid-April, hinting a rebound may be ahead. Initial resistance is at 95.88, the 23.6% Fibonacci expansion, with a break above that exposing the 38.2% level at 97.87. Alternatively, move beneath trend line support (now at 93.69) exposes an upward-sloping barrier set from the May 1 low at 92.04, followed by the June 3 bottom at 91.23.

Commodities_Gold_Oil_Look_to_US_Data_Set_to_Guide_Fed_Outlook_body_Picture_3.png, Gold, Oil Look to US Data Set to Guide Fed Outlook

Daily Chart - Created Using FXCM Marketscope 2.0

Gold Technical Analysis (Spot)- Prices are testing the 100% Fibonacci expansion at 1273.77, with a break beneath that exposing the 123.6% level at 1238.38. Early signs of positive RSI divergence hint a corrective bounce may be ahead, but confirmation is absent for the time being. Near-term resistance is at 1309.16, the 76.4% Fib, followed by the 61.8% expansion at 1331.05.

Commodities_Gold_Oil_Look_to_US_Data_Set_to_Guide_Fed_Outlook_body_Picture_4.png, Gold, Oil Look to US Data Set to Guide Fed Outlook

Daily Chart - Created Using FXCM Marketscope 2.0

Silver Technical Analysis (Spot)- Prices are testing below support at 20.21, the 61.8% Fibonacci expansion, with a break downward on a daily closing basis targeting the 76.4% level at 19.24. Near-term resistance is at 21.17, the 50% Fib, followed by the 38.2% mark at 22.03.

Commodities_Gold_Oil_Look_to_US_Data_Set_to_Guide_Fed_Outlook_body_Picture_5.png, Gold, Oil Look to US Data Set to Guide Fed Outlook

Daily Chart - Created Using FXCM Marketscope 2.0

Copper Technical Analysis (COMEX E-Mini)- Prices are testing back above support-turned-resistance at 30.44, the 50% Fibonacci expansion, with a close back above this boundary exposing the 38.2% level at 3.132 anew. Alternatively, renewed selling pressure eyes the 61.8% Fib at 2.956.

Commodities_Gold_Oil_Look_to_US_Data_Set_to_Guide_Fed_Outlook_body_Picture_6.png, Gold, Oil Look to US Data Set to Guide Fed Outlook

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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