Talking Points

  •  Crude Oil Likely to Decline as S&P 500 Index Futures Point to Risk Aversion
  •  Gold Down as US Dollar Mounts Aggressive Recovery to Start Trading Week

WTI Crude Oil (NY Close): $93.32 // -0.64 // -0.68%

Crude oil continues to reflect broad-based sentiment trends, with the WTI contract still showing a firm correlation with the S&P 500. This points the way lower as futures tracking the benchmark index trade aggressively lower ahead of the opening bell on Wall Street, hinting the rout that began in Asia and carried over into early European trade is set to continue.

Some profit-taking on risk-linked assets after the sharp advance in the aftermath of last week's EU summit was to be expected, but the current move seems to be at least equally reflective of protective repositioning as traders brace for a week packed with fundamental event risk. Chicago PMI and the Dallas Fed Manufacturing Activity Index releases headline the docket for today. Conflicting outcomes are expected, with the former reading pointing to a narrow deterioration in the pace of regional manufacturing- and service-sector growth while the latter, which focuses exclusively on the factory sector, signals a narrow improvement in October. The figures will help set the stage for the higher-profile ISM survey readings as well as the closely-watched Nonfarm Payrolls jobs report due later in the week.

Similar to the S&P 500, prices formed a Hanging Man candlestick below resistance at $94.87, the 50% Fibonacci retracement barrier. A selloff from here sees initial support at $90.17, the 38.2% Fib, with a break below that exposing $85.33 and $79.62.

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Spot Gold (NY Close): $1743.75 // -1.10 // -0.06%

Gold came under pressure as the recovery aggressive recovery in the US Dollar on renewed safe-haven demand amplified by Japan's intervention into the USDJPY exchange rate amounted to a de-facto headwind for the yellow metal. The sharp losses seen on S&P 500 stock index futures heading into North American trade promise more of the same.

Sizing up the technical landscape, prices put in a Doji candlestick below support-turned-resistance at $1745.15, with a subsequent decline on pace to complete a bearish Evening Star pattern. Initial support stands at the $1700 figure, the now familiar range top established in late September, with a break below that exposing the 23.6% Fibonacci extension at $1660.81.

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Spot Silver (NY Close): $35.32 // +0.22 // +0.62%

As with gold, silver is edging lower on the back of the sharp rebound in the US Dollar. Resistance has been found at $35.12, the 50% Fibonacci retracement, with prices turning lower toward support at the 38.2% level ($32.98). Alternatively, a reversal higher exposes the 61.8% Fib at $37.25.

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