Talking Points

  •  Crude Oil Set to Follow S&P 500 Rebound Higher
  •  Gold to Pull Back on Fading Safe Haven Demand

WTI Crude Oil (NY Close): $82.89 // +3.59 // +4.53%

Crude oil prices remain firmly anchored to sentiment trends, with prices closely tracking the S&P 500. Futures tracking the benchmark stock index are firmly in positive territory ahead of the opening bell on Wall Street, opening the door for profit-taking to produce a corrective rebound after yesterday's brutal selloff across the risky asset spectrum. Weekly US jobless claims figures headline the economic calendar, with mixed results expected as initial applications for benefits nudge higher while extensions inch lower.

Prices continue to stall near support at $81.57, the intersection of the 23.6% Fibonacci retracement level reinforced by the lower boundary of a falling channel set from the May swing high. As with the S&P 500, RSI studies are creeping out of oversold territory and early signs of positive divergence have emerged, bolstering the case for a corrective rebound. Initial resistance stands at $85.21, the 38.2% Fib.

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Spot Gold (NY Close): 1793.05 // +52.65 // +3.03%

A recovery in risk appetite is likely to undermine gold prices in the near term amid fading safe-haven demand. Indeed, short-term correlation studies continue to show a significant inverse relationship between the yellow metal and the S&P 500. As with oil, US weekly jobless claims figures represent the next major inflection point. Notably, the macro-level headwinds facing the global recovery remain broadly unchanged, so the path of least resistance favors risk aversion and any near-term improvement (which corresponds to lower gold prices) is likely corrective.

Prices are showing signs of fading strength with a bearish Harami candlestick pattern forming below the $1800 figure while RSI studies are in heavily overbought territory and revealing the beginnings of negative RSI divergence. Initial support stands at 1773.26, the 23.6% Fibonacci retracement level, but the key level to watch is the 50% Fib at 1727.15, a boundary that coincides with resistance-turned-support at a rising channel top. Through here would help neutralize immediate upside pressure for a more neutral tone.

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Spot Silver (NY Close): $39.28 // +1.71 // +4.54%

Identifying a well-defined fundamental catalyst for silver prices has been tough in recent days, with gold's safe haven allure not translating particularly well for the cheaper metal. Technically, prices are showing a bearish Harami candlestick pattern below Andrew's Pitchfork resistance, hinting a pullback is ahead. Initial support lines up at $37.72, while a break above pitchfork resistance targets the underside of rising trend line support-turned-resistance set from early July, now squarely at the $41.00 figure.

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