Talking Points

  •  Crude Oil Set to Follow S&P 500 Higher as Risky Assets Bounce
  •  Gold Selloff May Accelerate with ETF Holdings Yet to Take a Hit

WTI Crude Oil (NY Close): $79.85 // -0.66 // -0.82%

Prices are finding a bit of support, with a Doji candlestick above support at the 50% Fibonacci extension level ($78.03) hinting a bounce may be ahead. Indeed, S&P 500 stock index futures point firmly higher ahead of the opening bell on Wall Street, hinting risky assets are due for a correction in North American hours. The Dallas Fed Manufacturing Activity gauge headlines the economic calendar, with expectations calling for a modest improvement in September from the preceding month that ought to reinforce the likelihood of a near-term upward retracement. Initial resistance stands at $80.97, with a break above that exposing $84.61.

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Spot Gold (NY Close): 1656.80 // -83.32 // -4.79%

Gold is accelerating to the downside as liquidation triggered in the aftermath of last week's Federal Reserve monetary policy meeting where Ben Bernanke and company opted not to introduce new measures expanding the money supply continues. News wires are also citing traders selling the metal to cover losses sustained in other assets. Interestingly, gold ETF holdings remain well-supported, hinting a vast unwinding of what many started to call a speculative bubble has not begun despite recent volatility and hinting that a more violent move lower may still be in store in the weeks ahead.

With this in mind, prices are approaching oversold territory as the metal tests below Fibonacci support at 1643.83, hinting a bounce may be in the works (although firm signs of such a possibility have yet to emerge). Initial resistance lines up at 1695.05. Alternatively, a daily close piercing current support exposes a more convincing move to the next downside barrier at 1580.47 after today's brief spike to nudge the level was quickly rebuffed.

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Spot Silver (NY Close): $31.14 // -4.73 // -13.19%

As with gold, the unwinding of long silver positions is reaching fever pitch, with volatility amplified by its relatively more modest liquidity parameters as compared with its more expensive counterpart. Support at the May 12 low ($32.32) has been cleared and prices are now probing below the 76.4% Fibonacci extension at $30.82 to challenge the 100% level at $26.70. The 76.4% level has been recast as near-term resistance.

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