Talking Points

  • Copper May Fall as US Data Dents QE3 Hopes, Oil Looks to "Isaac" for Direction
  • Gold and Silver Prices at Risk if Beige Book, US GDP Point to Firming Recovery

Commodity prices continue to consolidate near familiar technical barriers as traders wait for Friday's much-anticipated speech from Fed Chairman Ben Bernanke at the Jackson Hole symposium. Traders hope the central bank chief will signal the intention of launching a third round of quantitative easing (QE3).

In the meantime, the focus is on the US economic calendar to set the stage for Friday's main event. Revised second-quarter GDP figures as well as the Fed's Beige Book regional economic survey are due to across the wires. Expectations see output revised slightly higher to show the economy added 1.7 percent compared with the originally reported 1.5 percent result.

Reinforcement by way of a firmer tone to the Beige Book may underscore the recent improvement in US economic data anddent easing expectations, weighing on risk appetite. This has scope to send sentiment-sensitive crude oil and copper prices lower, although in the case of the WTI contract news-flow surrounding Hurricane Isaac and its possible impact on Gulf refining capacity may overshadow risk trends. Such a scenario is likewise likely to punish gold and silver amid ebbing inflation-hedge demand.

WTI Crude Oil (NY Close): $96.33 // +0.86 // +0.90%

Prices are consolidating between resistance at 97.82, the 61.8% Fibonacci retracement, and support at 95.41, the February 2 low. A break downward initially targets the 50% Fib at 93.90. Alternatively, a push higher through resistance exposes a falling trend line set from the late-February swing top, now at 99.09.

"Commodities_Look_to_US_Data_to_Set_the_Stage_Before_Jackson_Hole_body_Picture_3.png,

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1666.90 // +2.80 // +0.17%

Prices are stalling below trend-defining resistance at a falling trend line set from the August 23 2011 swing high. Initial support is at 1658.55, the 50% Fibonacci retracement, with a break below that targeting the 38.2% level at 1627.46. Trend line resistance is now at 1671.16. A break above that on a daily closing basis exposes the 61.8% retracement at 1689.63 and the 1700/oz figure.

"Commodities_Look_to_US_Data_to_Set_the_Stage_Before_Jackson_Hole_body_Picture_4.png,

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Silver (NY Close): $30.88 // +0.16 // +0.53%

Prices continue to stall below trend-defining falling trend line resistance set from the late-April 2011 swing top (30.99). Near-term support lines up at 29.70. Alternatively, a break above resistance marks a significant reversal and initially exposes the 32.00 figure and a horizontal pivot at 32.93.

"Commodities_Look_to_US_Data_to_Set_the_Stage_Before_Jackson_Hole_body_Picture_5.png,

Daily Chart - Created Using FXCM Marketscope 2.0

COMEX E-Mini Copper (NY Close): $3.470 // -0.012 // -0.34%

Prices are pulling back following a test of resistance at the top of a rising channel set from the August 2 low. Near-term support lines up at 3.442, with a break below that exposing the intersection of the channel bottom and a falling trend line set from the April 3 high (3.394). Channel resistance is now at 3.528, a hurdle reinforced by a range top at 3.535. A push above the latter level exposes 3.618.

"Commodities_Look_to_US_Data_to_Set_the_Stage_Before_Jackson_Hole_body_Picture_6.png,

Daily Chart - Created Using FXCM Marketscope 2.0

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

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