Talking Points

  •  Crude Oil Adrift Along with S&P500 Futures Ahead of Wall Street Open
  •  Gold Needs US Dollar to Pick Direction to Establish a Directional Bias

WTI Crude Oil (NY Close): $100.36 // +0.57 // +0.57%

Risk sentiment trends are adrift after yesterday's sharp recovery, with traders apparently rethinking the implications of a 50bps swap rate cut from the world's top central banks, clouding the outlook for crude oil prices. The US ISM manufacturing gauge headings the economic calendar, with expectations calling for the highest reading in five months. This may underpin prices in the absence of anything new out of the Eurozone, but the debt crisis clearly continues to preoccupy investors.

On the technical front, prices are retesting support-turned-resistance at the bottom of a rising channel set from early October, now at 102.32. A break above this boundary exposes the November 17 high at 103.35. Support lines up at 94.56.

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Spot Gold (NY Close): $1746.38 // +30.65 // +1.79%

Indecisive risk trends make for a convoluted outlook for gold as the metal continues to take its cues from the decisively sentiment-driven US Dollar. As with crude, the ISM reading may prove to be a catalyst, with a stronger outcome weighing on gold by reducing the chance of a forthcoming QE program, but such considerations would quickly fade into the background in the face of another market-moving headline from the Eurozone.

Prices are testing resistance at 1746.08, the 14.6% Fibonacci extension, with a break higher exposing the November 8 high at 1802.77. Near-term support lines up at 1711.13, the 23.6% level, a boundary reinforced by a rising trend line underpinning price action since late September.

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Spot Silver (NY Close): $32.79 // +0.86 // +2.64%

As with gold, silver is looking for direction cues from the US Dollar, which s itself looking for a defined directional bas as risk trends search for conviction. Prices remain wedged below familiar range resistance at 33.04, with support at a rising trend line underpinning price action since late September (now at 30.81). A break lower initially exposes the 30.00 figure. Alternatively, a push upward through immediate resistance exposes 35.35.

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