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Crude Lacking Positive Supply Side Ques, Gold Testing Key Barrier

Crude Lacking Positive Supply Side Ques, Gold Testing Key Barrier

David de Ferranti, Currency Analyst

Talking Points

Crude oil witnessed another positive session to round out the week on Friday. This followed a surprise stimulus announcement by the PBOC, which in turn bolstered anticipation over robust demand from the world’s second largest consumer of the commodity.

Looking ahead supply-side factors are likely to take the reigns as the next OPEC meeting on the 27th draws closer. Members have thus far done little to respond to the dramatic decline for crude prices, and a lack of action at the meeting could leave supply glut concerns to linger. This in turn could keep pressure on the Brent and WTI benchmarks.

Also in the energy space; natural gas prices plunged by over 4 percent on Friday and are extending their declines in Asian trading today. As noted in recent reports without the support from frigid US weather speculation prices were unlikely to be sustained at their recent highs. This is given several months of above-average supply builds which may suggest ample supplies for the looming US winter.

Finally, the precious metals saw a solid session to finish the week with a less than spectacular performance from their USD counterpart. Looking ahead; US hours will bring Markit Composite and Services PMI figures which may offer the greenback some guidance. Yet the Markit figures have generally proven less market-moving than their ISM rivals. This suggests the US Dollar may be left lacking inspiration and in turn gold and silver could be afforded some further breathing room.

ECONOMIC EVENTS

Crude Lacking Positive Supply Side Ques, Gold Testing Key Barrier

Source:DailyFX Economic Calendar, Times In GMT

Market Movements (Fri 21 Nov, 2014, Close 5PM EST)

Energy

Open

High

Low

Close

$ Chg.

% Chg

US Oil

76.23

77.79

75.59

76.66

0.43

0.56%

UK Oil

79.91

81.59

79.04

80.49

0.58

0.73%

Natural Gas

4.457

4.526

4.236

4.24

(0.22)

-4.89%

Metals

Open

High

Low

Close

$ Chg.

% Chg

Gold

1,193.48

1,207.68

1,186.66

1,201.18

7.70

0.65%

Silver

16.24

16.61

16.12

16.42

0.17

1.07%

Palladium

769.9

794.2

768.8

789.7

19.80

2.57%

Platinum

1,211.40

1,234.00

1,205.50

1,226.10

14.70

1.21%

Copper

3.01

3.08

3.01

3.04

0.02

0.76%

CRUDE OIL TECHNICAL ANALYSIS

Crude remains capped below the 77.00 barrier with indications of a downtrend persisting (descending trendline, 20 SMA). However, confirmation of a Morning Star pattern alongside a push towards the zero bound for the Rate of Change indicator are warning of fading negative momentum. A daily close above the 77.00 hurdle would be required to warn of a base for the commodity.

Crude Oil: Sentiment May Be Shifting

Crude Lacking Positive Supply Side Ques, Gold Testing Key Barrier

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD TECHNICAL ANALYSIS

Gold remains at a crossroads as trend indicators warn of building upside momentum (20 SMA and ROC). Yet it is still capped below key resistance at 1,208 (also the 61.8% Fib.). This leaves a clearer setup desired to offer a more concrete technical bias.

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

Gold: Trend Indicators Begin To Point Higher

Crude Lacking Positive Supply Side Ques, Gold Testing Key Barrier

Daily Chart - Created Using FXCM Marketscope 2.0

SILVER TECHNICAL ANALYSIS

Silver has cleared two barriers; the 20 SMA and descending trendline, which together had kept the commodity capped for several months. However, it continues to struggle sub the 50% Fib which casts doubt on a further advance. A close above the nearby hurdle would be required to turn the spotlight higher towards the 17.70 ceiling.

Silver: Downtrend Remains Intact Despite Recent Bounce

Crude Lacking Positive Supply Side Ques, Gold Testing Key Barrier

Daily Chart - Created Using FXCM Marketscope 2.0

COPPER TECHNICAL ANALYSIS

Copper has continued its choppy impulsive swings under trendline resistance. Caution is suggested when adopting fresh positioning given the commodity’s tendency towards volatility over recent months. Further, trend indicators have proven prone to rapidly changing direction, suggesting a lack of strong conviction from traders.

Copper: Choppiness Suggests Caution Required

Crude Lacking Positive Supply Side Ques, Gold Testing Key Barrier

Daily Chart - Created Using FXCM Marketscope 2.0

PALLADIUM TECHNICAL ANALYSIS

Palladium has leapt over the 23.6% Fib. and 20 SMA, suggesting that the bears have lost their grip on the precious metal. While this is a bullish signal, some caution is required when looking to adopt fresh positioning. This is given palladium’s disposition towards whipsaws in recent trade.

Palladium: Bears Lose Their Grip

Crude Lacking Positive Supply Side Ques, Gold Testing Key Barrier

Daily Chart - Created Using FXCM Marketscope 2.0

PLATINUM TECHNICAL ANALYSIS

Platinum has witnessed similar price action to its precious metal siblings. A cross above the 20 SMA on the back of a Bullish Engulfing candlestick pattern warns of a potential shift in short-term sentiment. However, given the context of a core downtrend on the daily, a recovery would likely prove corrective with a more sustained advance being seen as questionable.

Platinum: Short-Term Sentiment Shifting

Crude Lacking Positive Supply Side Ques, Gold Testing Key Barrier

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.

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