Talking Points

  • Crude Oil, Copper Follow Stocks Lower on Chinese Exports Slump
  • Gold and Silver Fall as Haven Flows Boost Demand for US Dollar

Commodity prices are on the downswing as risk appetite evaporates amid economic slowdown fears after Chinese export growth slowed to the weakest in six months. Overseas sales added 1 percent in the year to July, falling short of economists' expectations for an 8 percent increase. New Loans dropped to CNY540.1 billion over the same period, marking the lowest reading since September 2011 and underscoring the deepening downturn in the world's second-largest economy.

Growth-linked crude oil and copper prices are following stocks lower. Meanwhile, gold and silver are facing de-facto selling pressure as the risk-off mood reboots haven demand for the US Dollar. A lackluster US economic calendar suggests sentiment trends are likely to be left to their own devices into the end of the trading week. This opens the door for the rout to continue as S&P 500 stock index futures point firmly lower ahead of the opening bell on Wall Street.

WTI Crude Oil (NY Close): $93.36 // +0.01 // +0.01%

Prices are recoiling from resistance in the 93.21-90 area marked by the July 19 high and the 50% Fibonacci retracement, with sellers aiming to challenge support stands at the psychologically significant 90.00 figure. This barrier is reinforced by the 38.2% retracement at 89.87, with a push below that targets a rising trend line now at 88.01. Alternatively, a reversal through resistance initially targets the 61.8% Fib at 97.82.

"Commodities_Sold_as_China_Exports_Slump_Sinks_Sentiment_Boosts_Dollar_body_Picture_3.png,

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1617.25 // +5.13 // +0.32%

Prices are edging lower from resistance in the 1620.45-35.70 congestion area aiming to test support at a rising trend line support set from late June, now at 1591.81. A break below this boundary exposes a longer-term trend line established from the May 16 bottom currently at 1573.49.

"Commodities_Sold_as_China_Exports_Slump_Sinks_Sentiment_Boosts_Dollar_body_Picture_4.png,

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Silver (NY Close): $28.14 // +0.09 // +0.32%

Prices continue to tread water after taking out resistance at 27.68. Near-term resistance lines up at 28.44, with a break above that exposing 29.42. Alternatively, a reversal back through support targets a rising trend line at 27.17 and 26.75.

"Commodities_Sold_as_China_Exports_Slump_Sinks_Sentiment_Boosts_Dollar_body_Picture_5.png,

Daily Chart - Created Using FXCM Marketscope 2.0

COMEX E-Mini Copper (NY Close): $3.426 // +0.004 // +0.12%

Prices are pulling back from resistance at 3.435 to retest the 3.378-90 congestion area marked by the 23.6% Fibonacci expansion and a horizontal pivot barrier. A break lower initially exposes 3.300, followed by the 23.6% Fib at 3.268. Alternatively, a push above resistance targets 3.535.

"Commodities_Sold_as_China_Exports_Slump_Sinks_Sentiment_Boosts_Dollar_body_Picture_6.png,

Daily Chart - Created Using FXCM Marketscope 2.0

--- Written byp Ilya Sivak, Currency Strategist for Dailyfx.com

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