Talking Points

  •  Crude Oil to Rise with Stocks on Pickup in US Employment Growth
  •  Gold May Retreat on Lull in Eurozone Debt Crisis News, US Jobs Data

WTI Crude Oil (NY Close): $101.81 // -1.41 // -1.37%

Crude oil prices remain firmly anchored to broad-based sentiment trends, hinting an upswing may be ahead as the spotlight turns to the US Employment report on tap in the afternoon. Expectations call for nonfarm payrolls to rise 155,000 in December, marking the largest jobs increase in three months. Absent an unexpected gloomy headline out of the Eurozone this seems likely to boost risk appetite into the week-end on hopes an accelerating recovery in the US will help offset the global economic slowdown expected this year. Short-term decoupling from risk trends is not out of the question however as geopolitical risk creeps back into the picture after Iran threatened to hold military in the Strait of Hormuz in the coming weeks, threatening to disrupt a major shipping lane carrying close to 40 percent of the global seaborne crude supply.

On the technical front, prices moved lower as expected having put in a bearish Hanging Man candlestick below resistance at 103.35, the November 17 high. Near-term support remains at 101.28, with a break below that exposing the 100.00 figure and 97.89. Alternatively, a reversal higher through immediate resistance clears the way for a push to 106.05.

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Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1622.72 // +11.13 // +0.69%

Gold ETF holdings hit a two-month low yesterday - pointing to eroding investment interest in the yellow metal - and a relatively stronger US jobs report may stoke liquidation pressure as firming economic growth trims QE3 bets and weighs on demand for a hedge against runaway inflation. A lull in Eurozone debt crisis news-flow likewise bodes ill for gold prices, denting safe-haven inflows. Continued saber-rattling in Iran may be a mitigating however, capping the downside over the near term.

Sizing up the chart setup, prices are testing resistance at 1629.57, the 38.2% Fibonacci retracement level, with a break higher exposing the 50% barrier at 1662.65. Near-term support lines up at 1575.64 at long-term rising trend line based from October 2008.

Crude_Oil_to_Rise_While_Gold_Declines_on_US_Jobs_Report_body_Picture_4.png,

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Silver (NY Close): $29.36 // +0.18 // +0.61%

Silver prices are being pulled in opposing forces as the US jobs report approaches. On one hand, a pickup in employment growth is likely to weigh on QE3 expectations and pressure silver lower amid waning demand for store-of-value alternatives to fiat currency. On the other, firming risk appetite likely in the wake of the data release will probably put pressure on the safe-haven US Dollar, offering silver a de-facto boost given the metal's prices are denominated in terms of the benchmark unit. The dominant range is defined between support at 28.41 and resistance at 29.79.

Crude_Oil_to_Rise_While_Gold_Declines_on_US_Jobs_Report_body_Picture_5.png,

Daily Chart - Created Using FXCM Marketscope 2.0

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