Crude Oil Prices May Break Range Floor Amid Risk Aversion

2016-07-06 08:03:00 Ilya Spivak

Talking Points:

Gold prices poised to break June swing high
Crude oil prices sink back to range support
S&P 500 futures hint at risk-off trade ahead

Crude oil prices plunged alongside stocks amid renewed risk aversion yesterday. Meanwhile, gold prices pushed higher for a fifth consecutive session as haven-seeking capital flows sent bonds higher and weighed on yields, bolstering the relative appeal of non-interest-bearing assets. Investors’ sour mood appeared to reflect worries about the implications of the Brexit referendum for global growth trends.

The roundup of June’s Eurozone Retail PMI surveys and the service-sector US ISM report headline the data docket in the hours ahead. Upbeat results in line with recent improvement on news-flow from the world’s largest economy and the single currency bloc may work against risk-off sentiment, helping the WTI contract recover while capping gold’s gains.

The results will probably miss most of the impact from the post-Brexit carnage on economic activity however, meaning traders may not find them particularly compelling. Meanwhile, S&P 500 futures are pointing sharply lower ahead of the opening bell on Wall Street, hinting that continued risk aversion may be on tap in the hours ahead.

GOLD TECHNICAL ANALYSIS – Gold prices attempting to secure a break of last month’s swing high. Confirming a breach of the 100% Fibonacci expansion at 1366.04 on a daily closing basis exposes the 123.6% level at 1393.40. Alternatively, a reversal below the 76.4% Fib at 1338.68 targets the 61.8% expansion at 1321.75.

CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices sank back toward range support above the $45/barrel figure. Daily close below the 23.6% Fibonacci retracement at 45.60 targets the 38.2% level at 41.86. Alternatively, a move above falling trend line resistance at 49.20 exposes the 23.6% Fib expansionat 51.86.