DailyFX

Commodities: Crude Oil and Gold May Correct Lower Before NFP, ISM

Ilya Spivak

Crude oil and gold prices may correct downward amid profit-taking following yesterday’s rally as investors brace for Friday’s much-anticipated NFP and ISM data.

Talking Points

  • Commodity Prices May Turn Lower Amid Corrective Profit-Taking

  • Traders Looking Past Quiet Thursday Docket to Friday’s NFP, ISM

Commodity prices are in consolidation mode in European trade. A lackluster economic calendar in US hours and absent conviction on the risk sentiment front (as telegraphed by flat S&P 500 futures) point to continued sideways trade ahead as markets brace for Friday’s burst of high-profile event risk. The much-anticipated US Nonfarm Payrolls report as well as the ISM Manufacturing survey are both due to cross the wires. In the meantime, yesterday’s strong rallies may open the door for a correction lower amid profit-taking, leading precious metals as well as crude oil and copper cautiously lower.

WTI Crude Oil (NY Close): $97.94 // +0.37 // +0.38%

Prices cleared resistance at 97.41, exposing the 100.00 figure and the September 14 high at 100.40. Negative RSI divergence warns of ebbing bullish momentum however and hints a reversal may be brewing. The 97.41 level has been recast as near-term support and is reinforced by a rising trend line at 96.91. A break below the latter level targets 94.61.

Commodities_Crude_Oil_and_Gold_May_Correct_Lower_Before_NFP_ISM_body_Picture_4.png, Commodities: Crude Oil and Gold May Correct Lower Before NFP, ISM
Commodities_Crude_Oil_and_Gold_May_Correct_Lower_Before_NFP_ISM_body_Picture_4.png, Commodities: Crude Oil and Gold May Correct Lower Before NFP, ISM

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1677.05 // +13.25 // +0.80%

Prices pushed higher as expected after completing a bullish Morning Star candlestick pattern above major rising trend line support dating back to mid-May (1653.31). Near-term resistance is at 1690.39, the 38.2% Fibonacci retracement, followed by the 1700/oz figure and a channel top at 1700.68. Alternatively, a reversal below support targets the January 4 low at 1625.69 and the falling channel bottom at 1602.09.

Commodities_Crude_Oil_and_Gold_May_Correct_Lower_Before_NFP_ISM_body_Picture_3.png, Commodities: Crude Oil and Gold May Correct Lower Before NFP, ISM
Commodities_Crude_Oil_and_Gold_May_Correct_Lower_Before_NFP_ISM_body_Picture_3.png, Commodities: Crude Oil and Gold May Correct Lower Before NFP, ISM

Daily Chart - Created Using FXCM Marketscope 2.0

Spot Silver (NY Close): $32.04 // +0.63 // +2.01%

Prices moved higher as expected after putting in a Bullish Engulfing candlestick pattern above support at 30.66, the 23.6% Fibonacci retracement. Buyers have now cleared initial resistance at 31.56, the 38.2% level, exposing the 50% Fib at 32.29. A further push above that eyes the 61.8% retracement at 33.02.

Commodities_Crude_Oil_and_Gold_May_Correct_Lower_Before_NFP_ISM_body_Picture_2.png, Commodities: Crude Oil and Gold May Correct Lower Before NFP, ISM
Commodities_Crude_Oil_and_Gold_May_Correct_Lower_Before_NFP_ISM_body_Picture_2.png, Commodities: Crude Oil and Gold May Correct Lower Before NFP, ISM

Daily Chart - Created Using FXCM Marketscope 2.0

COMEX E-Mini Copper (NY Close): $3.750 // +0.058 // +1.57%

Prices broke above resistance at 3.736, marked by a falling trend line set from early February 2012 and the 38.2% Fibonacci expansion. Buyers now target the 50% level at 3.778, with a push above that aiming for the 61.8% level at 3.820. The 3.736 level has been recast as support, with a drop back below that eyeing rising trend line support at 3.654.

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