Talking Points

  •  Crude Oil Outlook Clouded as Sentiment Searches for Direction
  •  Gold Established as Safe Haven, Looking to Risk Appetite for Cues

WTI Crude Oil (NY Close): $99.20 // -0.67 // -0.67%

The landscape appears clouded ahead of the opening bell on Wall Street with S&P 500 stock index futures flat and pointing to indecision in risk sentiment trends, the leading near-term driver of oil prices. On one hand, investors face the lingering uncertainty surrounding the US debt ceiling and deficit-reduction debate after pair of prickly back-to-back speeches from US President Obama and House Speaker Boehner seemingly entrenched the impasse further yesterday.

On the other, a long list of earnings releases is on tap, with markets paying particular attention to results from economic growth-sensitive names like Lockheed Martin, UPS and AK Steel amid continued fears of a broad-based global slowdown in the second half of the year. US Consumer Confidence and New Home Sales as well as the Richmond Fed's manufacturing gauge headline the calendar. The preliminary set of weekly inventory figures from API is also on tap.

Sizing up the technical picture, prices are testing resistance at the psychologically critical $100/barrel figure, with a break higher exposing the familiar barrier at $103.30. Near-term rising trend line support stands at $96.72. The current setup appears reminiscent of the Ascending Triangle formation carved out between early May and June, pointing to bearish continuation after a consolidation period, though confirmation on a break of trend line support is needed before that can be said with confidence.

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Spot Gold (NY Close): 1614.15 // +12.88 // +0.80%

The inverse correlation between the S&P 500 and gold prices is growing increasingly significant, reinforcing the yellow metal's safe-haven credentials. Like oil, that amounts to an uncertain near-term outlook at the moment as sentiment trends look for direction with the global growth outlook in flux while the US debt fiasco continues to fester.

Prices are inching lower following a retest of support-turned-resistance at the underside of a rising channel established from the July swing low. Negative RSI divergence points to fading bullish momentum and argues for a pullback. Initial support lines up at $1604.55 - a former range top - while near-term resistance stands at $1620.25.

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Spot Silver (NY Close): $40.38 // +0.26 // +0.65%

Silver continues to broadly mimic the trading dynamics of its more expensive counterpart, carving out an increasingly defined inverse correlation with stock prices. Technical positioning remains indecisive however, with prices still locked in consolidation below resistance at $41.06, with a Doji candlestick reinforcing a lack of directional commitment for the time being. A break below initial support at $39.01 exposes downside targets at $37.97 and $37.09. Alternatively, a push above resistance exposes $43.11.

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