Talking Points

  •  Crude Oil Downtrend Set to Resume as Risk Aversion Returns
  •  Gold Selling Resumes, ETF Holdings Hit Lowest Since Late July

WTI Crude Oil (NY Close): $81.21 // -3.24 // -3.84%

Crude oil prices turned lower despite a smaller than expected build in weekly inventories and a relatively positive surprise on the US Durable Goods report as renewed fears about sovereign risk in the Euro Zone weighed on the spectrum of risky assets including the WTI contract.

Looking ahead, the focus on the EU debt fiasco will put a spotlight on Italy as it sells 9 billion euro in new debt spread across 2014-2022 maturities. Weak uptake is likely to weigh on risk appetite at large and crude prices by extension. A busy US calendar is on tap later in the day, with the third revision of second quarter GDP figures, weekly jobless claims, Augusts' Pending Home Sales report, and the Kansas City Fed Manufacturing Activity gauge all due to cross the wires.

On the technical front, prices reversed lower from resistance at $84.16, the 23.6% Fibonacci extension level, to form a Bearish Engulfing candlestick pattern and break back below the 38.2% level $80.97. The bears now aim to challenge the 50% Fib at $78.03.


Spot Gold (NY Close): 1608.80 // -41.32 // -2.50%

Gold turned lower anew as the correction in post-FOMC moves began to lose momentum across financial markets, with the US Dollar rising as shares fell to undermine the value of the yellow metal. ETF holdings dropped to the lowest level since late July yesterday, hinting liquidation is broadening from the speculative institutional space to capture a wider swathe of investors. Futures positioning data from the CFTC shows that speculative long gold positions dropped to the lowest since May 2009 last week.

Sizing up the technical landscape, prices broke back below support at $1624.09, the 23.6%Fibonacci retracement level, to challenge the minor 14.6% boundary at 1589.14. A break below the latter level exposes the September 26 low at $1532.45. However, early signs of positive RSI divergence warn that another leg higher may materialize before the larger selloff resumes. The 23.6% Fib has been recast as resistance.


Spot Silver (NY Close): $29.86 // -2.04 // -6.40%

As with gold, the silver selloff appears to have resumed, with prices slipping back below support at the 23.6% Fibonacci retracement level ($30.14) to challenge minor support at $28.58, the 14.6% Fib. A break below the latter boundary exposes the September 26 low at $26.05. The 23.6% Fib as been recast as near-term resistance.