Fundamentals, Oil & Gold

Gold Fails at Resistance, Metals Reveal Bearish Cues

Commodities – Energy

Oil Fails to Break Higher, Major Support in Sight Near $75

Crude Oil (WTI)       $77.11      +$0.51        +0.67%
Prices once again bounced lower from the top of the falling channel that has guided crude since the swing top in October. The medium-term down trend now faces a major hurdle just below the $75 mark as the channel bottom coincides with a major rising trend line established from the lows in February and an important horizontal resistance-turned-support level. A break below here would be a trajectory-defining outcome, confirming the high above $80 as a major top and opening the door for a sizable move lower. The data docket is tame before Friday’s Nonfarm Payrolls report, leaving risk trends and the trajectory of the US Dollar as the primary catalysts. European shares are trading higher and US equity index futures are up about 0.5%, suggesting risky assets (and crude with them) are likely to remain supported at least for the time being.

Commodities – Metals

Gold, Silver Technical Positioning Reveals Bearish Cues

Gold       $1218.53       +$2.83       +0.23%
Despite relentless advances to new highs, technical positioning seems to hint that a reversal lower may be ahead. Prices are showing a Rising Wedge bearish reversal formation. Formidable support lines up near $1215, the intersection of the wedge’s lower boundary and a horizontal resistance-turned-support level. A sustained move below this juncture would open the door for extended downside (at least) targeting a return back below the $1200 mark. Fundamentally, the interest rate outlook for the US Fed remains the dominant catalyst, which leaves gold to trade off risk trends and their invariable impact on the Dollar until the calendar heats up with the Nonfarm Payrolls release on Friday.

Silver       $19.23       -$0.01       -0.05%
Prices appear to be taking time to consolidate ahead of major resistance at $19.47, the July 2008 swing high. Recent gains show sharp negative divergence with relative strength studies, hinting that a pullback is likely from here. Initial support is seen at $18.86, a recently broken triple top that had contained prices through November. As with gold, risk trends remain fundamental catalyst to watch.