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Commodities: Crude Oil, Gold May Bounce on Soft US ISM Data

Commodities: Crude Oil, Gold May Bounce on Soft US ISM Data

Ilya Spivak, Head Strategist, APAC

Talking Points

  • Commodities Under Pressure as Markets Digest Wednesday’s FOMC Outcome
  • Crude Oil, Metals May Correct Higher on Soft US ISM Manufacturing Report
  • Copper Continues Narrow Consolidate, Silver Prices Eying 4-Month Support

Commodity prices are under pressure in European trade as investors continue to digest Wednesday’s FOMC policy meeting. The central bank disappointed the markets’ hopes for a meaningful dovish shift in official rhetoric, eroding sentiment across financial markets (as expected). Cycle-linked crude oil and copper prices are following stocks lower while a rebound in the US Dollar is denting anti-fiat demand and weighing on gold and silver.

A respite may be in sight however as October’s USISM Manufacturingdata crosses the wires. Median forecasts suggest factory-sector activity slowed, with the index dropping for the first time since May to print at a five-month low of 55.0. A soft outcome is likely to rekindle hopes for a delay of the Fed’s move to scale back stimulus, boosting risky assets and precious metals. Needless to say, an upside surprise stands to yield the opposite result.

Capitalize on Shifts in Market Mood with the DailyFX Speculative Sentiment Index.

CRUDE OIL TECHNICAL ANALYSIS Prices are testing support at 95.82, the 76.4% Fibonacci expansion. A break below that targets the bottom of a falling channel set from early September (94.67), followed by the 100% level at 93.18. Alternatively, a break above resistance at 97.45, the 61.8% Fib, targets the intersection of the channel’s upper boundary and the 50% expansion at 98.76.

Commodities_Crude_Oil_Gold_May_Bounce_on_Soft_US_ISM_Data_body_Picture_3.png, Commodities: Crude Oil, Gold May Bounce on Soft US ISM Data

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD TECHNICAL ANALYSIS Prices turned lower anew, with sellers now testing support at the 23.6% Fibonacci expansion (1318.73). A break below this barrier initially exposes the 38.2% level at 1292.15. Near-term resistance is at 1361.70, the October 28 swing high.

Commodities_Crude_Oil_Gold_May_Bounce_on_Soft_US_ISM_Data_body_Picture_4.png, Commodities: Crude Oil, Gold May Bounce on Soft US ISM Data

Daily Chart - Created Using FXCM Marketscope 2.0

SILVER TECHNICAL ANALYSIS Prices are moving to challenge support in the 21.30-43 area, marked by a rising trend line set from late June and the 38.2% Fibonacci expansion. A break below that targets the 50% level at 20.76. Alternatively, a move back above the 23.6% Fib at 21.98 exposes the 14.6% expansion at 22.39.

Commodities_Crude_Oil_Gold_May_Bounce_on_Soft_US_ISM_Data_body_Picture_5.png, Commodities: Crude Oil, Gold May Bounce on Soft US ISM Data

Daily Chart - Created Using FXCM Marketscope 2.0

COPPER TECHNICAL ANALYSISPrices are consolidating in a Triangle chart pattern, a setup hinting at bullish continuation in this instance. A break above the formation’s top (3.334) initially targets 3.378. Alternatively, a reversal through Triangle support (3.236) aims for swing lows in the 3.190-233 area.

Commodities_Crude_Oil_Gold_May_Bounce_on_Soft_US_ISM_Data_body_Picture_6.png, Commodities: Crude Oil, Gold May Bounce on Soft US ISM Data

Daily Chart - Created Using FXCM Marketscope 2.0

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

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