Talking Points

  •  Crude Oil Set to Bounce Higher with S&P 500
  •  Gold Rally Has Met Key Technical Resistance

WTI Crude Oil (NY Close): $93.79 // -1.10 // -1.16%

S&P 500 stock index futures are on the upswing on profit-taking after seven consecutive days of selling, with crude prices likely to follow suit amid a broad recovery in risk appetite. Global slowdown fears remain however, and traders will keep a keen eye on the US ADP Employment reading ahead of Friday's all-important official Department of Labor jobs figures. The ISM Non-Manufacturing gauge, the Factory Orders report, and the weekly set of DOE inventory figures are also on tap.

On the technical front, prices have declined to retest the lower boundary of a long-term rising channel that has guided the rally since March 2009 once again, with a break lower on a weekly basis amounting to a structural trend reversal. Near term, piercing through Fibonacci support at $93.79 has exposed $92.19, with the former level now recast as resistance.

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Spot Gold (NY Close): 1661.00 // +42.18 // +2.61%

Gold may find itself on the defensive as stock index futures point to a recovery in risk appetite, threatening to weigh on safe-haven demand and work against the yellow metal. With that said, the environment remains extremely fragile, with any significant downside surprises on the US data front capable of sinking risk appetite and encouraging gold higher.

Technically, prices are testing the upper boundary of a rising channel that has guided the rally higher since mid-May 2010, a boundary reinforced by the 61.8% and 76.4% Fibonacci extension levels at $1643.51 and $1682.67, respectively. Negative RSI divergence continues to warn of ebbing bullish momentum, but no meaningful signs of imminent reversal have presented themselves. Should a pullback indeed materialize, initial support stands at $1577.05.

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Spot Silver (NY Close): $40.80 // +1.51 // +3.83%

Broadly speaking, positioning is little changed from yesterday, with directionless trade continuing as prices remain wedged between the 50% and 38.2% Fibonacci retracement levels at $41.06 and $39.01, respectively. As with gold, a corrective bounce in risk appetite threatens to push prices lower, but a negative surprise on any of the headline US data releases set to cross the wires later in the day could change that very quickly.

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