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Crude Oil Bounces As Bears Book Profits, Gold Awaits US Sentiment Data

Crude Oil Bounces As Bears Book Profits, Gold Awaits US Sentiment Data

David de Ferranti, Currency Analyst

Talking Points

Crude oil rebounded strongly on Thursday with newswires pointing to profit-taking near a technical barrier as a potential catalyst for the recovery. The gains occurred despite another overwhelmingly bearish inventories report from the DOE. The government agency revealed the largest rise in total stocks since April, as well as a climb in the rate of US production to its highest since 1985.

Looking ahead; the University of Michigan Consumer Confidence figures headline the US docket before the end of the week. Yet the hurdle for the leading indicator to generate a strong reaction from crude may be high. This is given the growth concerns that have dragged the commodity into bear-market territory have been more focused on the Eurozone and China, rather than the US.

With a lack of cues from major data points the door may be left open to further ‘profit-taking’ for Brent and WTI in the very short-term. However, a more sustained recovery is likely to remain challenging amid lingering global supply glut concerns.

Turning to the precious metals; gold suffered modest declines in recent trade alongside a marginal recovery for its pricing currency the USD. The greenback did however give back most of its gains following dovish comments from the Fed’s Bullard. If the upcoming UofM figures disappoint it may further cool Fed rate hike expectations, which in turn could leave gold and silver some breathing room.

Finally, copper plunged to its lowest level in 6 months on Thursday with news sources tying the declines to lingering global growth concerns. Next week brings a round of top-tier economic data from the base metal’s largest consumer, China, which could in turn spell further volatility for the commodity.

ECONOMIC EVENTS

Crude Oil Bounces As Bears Book Profits, Gold Awaits US Sentiment Data

Source:DailyFX Economic Calendar, Times In GMT

Market Movements (Thu 16 Oct, 2014, Close 5PM EST)

Energy

Open

High

Low

Close

$ Chg.

% Chg

US Oil

81

84.04

79.76

83.05

2.05

2.53%

UK Oil

83.28

87.97

82.91

86.02

2.74

3.29%

Natural Gas

3.805

3.828

3.742

3.81

0.00

0.05%

Metals

Open

High

Low

Close

$ Chg.

% Chg

Gold

1,241.75

1,245.09

1,235.31

1,238.70

(3.05)

-0.25%

Silver

17.44

17.53

17.19

17.37

(0.08)

-0.45%

Palladium

765.1

768.6

728.2

740.7

(24.40)

-3.19%

Platinum

1,260.50

1,262.50

1,237.60

1,246.10

(14.40)

-1.14%

Copper

3.006

3.026

2.951

2.984

(0.02)

-0.73%

CRUDE OIL TECHNICAL ANALYSIS

Crude’s rebound from the 80.00 floor has produced a Bullish Engulfing formation on the daily. Yet confirmation of the reversal signal from a successive up-day may prove difficult with the 84.00 ceiling nearby. Alongside a core downtrend this leaves the risks focused on a retest of the psychologically-significant 80.00 handle.

Crude Oil: Buying Interest Renewed At Psychologically-Significant 80.00 Handle

Crude Oil Bounces As Bears Book Profits, Gold Awaits US Sentiment Data

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD TECHNICAL ANALYSIS

Gold is struggling to sustain its recent strength following a leap over the descending trendline, 20 SMA, and into positive territory on the Rate of Change indicator. A climb over former support-turned-resistance at 1,241 would be required to pave the way for a revisit of the 1,257 barrier.

The DailyFX SpeculativeSentimentIndex suggests a bullish bias for gold based on trader positioning.

Gold: Struggles Near 1,241 Ceiling

Crude Oil Bounces As Bears Book Profits, Gold Awaits US Sentiment Data

Daily Chart - Created Using FXCM Marketscope 2.0

SILVER TECHNICAL ANALYSIS

Silver’s recent rebound remains seen as corrective within the context of a broader downtrend on the daily (20 SMA and descending trendline). Yet with downside momentum fading (reflected by the ROC) a consolidation remains the more likely path, rather than a sharp decline.

Silver: Consolidation Endures As Negative Sentiment Fades

Crude Oil Bounces As Bears Book Profits, Gold Awaits US Sentiment Data

Daily Chart - Created Using FXCM Marketscope 2.0

COPPER TECHNICAL ANALYSIS

Copper has crashed through the 3.00/1 floor after failing to clear the 38.2% Fib. near 3.10. The slide below the zero bound for the Rate of Change indicator and drop under 20 SMA suggests a resumption of the downtrend. A daily close below the nearby 2.96 barrier would open the next leg lower to 2.91.

Copper: Slides Under 3.00 Floor As Downtrend Resumes

Crude Oil Bounces As Bears Book Profits, Gold Awaits US Sentiment Data

Daily Chart - Created Using FXCM Marketscope 2.0

PALLADIUM TECHNICAL ANALYSIS

Palladium has bounced off the 735 target offered in recent reports. Yet at this stage the recovery appears corrective within the context of a broader downtrend for the precious metal. A close below the 735 barrier would open the 695 floor.

Palladium: Finds Buying Interest At 735 Target

Crude Oil Bounces As Bears Book Profits, Gold Awaits US Sentiment Data

Daily Chart - Created Using FXCM Marketscope 2.0

PLATINUM TECHNICAL ANALYSIS

Platinum continues to cling to the 23.6% Fib. near 1,263 as a parade of Dojis denote indecision amongst traders. A more convincing close below the 1,250 handle would be required to open a revisit of the recent lows near 1,186.

Platinum: Dojis Highlight Hesitation Near Fib. Barrier

Crude Oil Bounces As Bears Book Profits, Gold Awaits US Sentiment Data

Daily Chart - Created Using FXCM Marketscope 2.0

Written by David de Ferranti, Currency Analyst, DailyFX

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Contact and follow David on Twitter: @DaviddeFe

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES