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Crude Remains At Risk On US Inventories, Gold Braces For FOMC Decision

Crude Remains At Risk On US Inventories, Gold Braces For FOMC Decision

2014-12-16 23:16:00
David de Ferranti, Currency Analyst
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Talking Points

The Brent benchmark stole the limelight in recent trade with a decline of over 1 percent for the session and drop below $60 a barrel. Supply glut concerns and downgraded demand expectations continue to dominate sentiment towards the commodity. Upcoming US Inventories Data may do little to lift crude’s burden. This is given the most recent set of figures revealed another fresh multi-decade high for the rate of US production.

Meanwhile, gold erased early gains in trading on Tuesday to finish the session relatively unchanged. A lackluster day for the US Dollar likely saved the precious metal from suffering a loss. The upcoming December FOMC decision offers a substantial piece of event risk for the greenback and in turn gold. If policy makers note the positive progress in the US labor market, and downplay subdued inflation expectations it could be supportive for the USD, and in turn put pressure on the metals.

ECONOMIC EVENTS

Please refer to the DailyFX Economic Calendar for the events over the session ahead.

Market Movements (Tue 16 Dec, 2014, Close 5PM EST)

Energy

Open

High

Low

Close

$ Chg.

% Chg

US Oil

55.28

57.11

53.59

55.40

0.12

0.22%

UK Oil

60.48

61.16

58.49

59.82

(0.66)

-1.09%

Natural Gas

3.732

3.784

3.6

3.62

(0.11)

-2.97%

Metals

Open

High

Low

Close

$ Chg.

% Chg

Gold

1,192.86

1,223.35

1,187.23

1,196.81

3.95

0.33%

Silver

16.13

16.63

15.52

15.69

(0.44)

-2.70%

Palladium

795.9

806

780

781

(14.90)

-1.87%

Platinum

1,207.40

1,226.70

1,193.60

1,195.80

(11.60)

-0.96%

Copper

2.87

2.89

2.84

2.86

(0.01)

-0.28%

CRUDE OIL TECHNICAL ANALYSIS

Crude remains locked in a downtrend as signaled by the 20 SMA and ROC indicators. A Doji has emerged on the daily, yet an absence of more definitive reversal signals suggests a sustained recovery may be unlikely at this stage. At the same time a small corrective bounce should not be precluded given the extent of recent declines. Sellers may look to keep the commodity capped below the 60.74 mark. Meanwhile, the next downside target is offered by the April ’09 Low at 46.70.

Crude Oil: Eyes April ’09 Low Amid Persistent Downtrend

Crude Remains At Risk On US Inventories, Gold Braces For FOMC Decision

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD TECHNICAL ANALYSIS

Gold is keeping traders in suspense near the 1,187 floor. An Inverted Hammer has emerged, yet awaits confirmation from a successive up-day to suggest a possible recovery. Additionally, signs of a short-term downtrend appear to be re-emerging (ROC dipping into negative territory, prices below 20 SMA). This suggests a break lower would potentially open a retest of the recent lows near 1,137.

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

Gold: Reversal Signal Emerges Near 1,187 Floor

Crude Remains At Risk On US Inventories, Gold Braces For FOMC Decision

Daily Chart - Created Using FXCM Marketscope 2.0

SILVER TECHNICAL ANALYSIS

A string of Doji formations on the daily chart signaled hesitation from the silver bulls to lead the precious metal above the 17.30 ceiling. The recent pullback has put trend indicators back into negative territory (including the ROC and 20 SMA). The breach of the psychologically-significant 16.00 handle has put the spotlight back on the 15.00 floor.

Silver: Eyes 15.00 Handle As Trend Indicators Turn Lower

Crude Remains At Risk On US Inventories, Gold Braces For FOMC Decision

Daily Chart - Created Using FXCM Marketscope 2.0

COPPER TECHNICAL ANALYSIS

Signs of a downtrend from the 20 SMA and ROC have resurfaced for copper, suggestingthe risks are likely skewed lower. This in turn keeps the June ’10 low in sight with sellers sitting nearby at the 2.96 ceiling. However, caution is still suggested when adopting fresh positioning - given the commodity’s tendency towards whipsaws over recent months.

Copper: Sights Set On June 2010 Low

Crude Remains At Risk On US Inventories, Gold Braces For FOMC Decision

Daily Chart - Created Using FXCM Marketscope 2.0

PALLADIUM TECHNICAL ANALYSIS

The 50% Fib. has kept palladium capped as signs of a shift towards a downtrend re-emerge. The slide under buying interest at 792 may be the precursor to a greater descent towards the recent lows near 727.

Palladium: Failure To Breach Fib. Barrier Sees Risks Shift Lower

Crude Remains At Risk On US Inventories, Gold Braces For FOMC Decision

Daily Chart - Created Using FXCM Marketscope 2.0

PLATINUM TECHNICAL ANALYSIS

Platinum is within striking distance of the 1,185 barrier that has kept the commodity supported over recent months. Trend indicators have again turned lower. This suggests a breach of the nearby barrier could open the door to a descent on the July ’09 low near 1,101.

Platinum: Awaits Breach Of Nearby Support Barrier

Crude Remains At Risk On US Inventories, Gold Braces For FOMC Decision

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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