Talking Points
Crude Oil Recovery May Prove Limited As Supply Glut Story Persists
Gold Faces A High Threshold For A Recovery In The FOMC Aftermath
Quarterly Forecast: Gold RemainsVulnerable To USD Strength
Gold slumped on Wednesday as its pricing currency the USD gained on the back of the December FOMCdecision. The removal of the ‘considerable time’ phrase from the policy statement, and an upgrade to the US growth outlook offered positive cues for the greenback.
Looking ahead medium-tier economic data including US Initial Jobless Claims likely have a high-threshold to impress traders in the aftermath of the Fed meeting. At the same time it would likely take a material negative surprise to the US data to dent the USD and lead a recovery for gold.
Meanwhile, the crude benchmarks recovered some ground in recent trade. This was despite another generally negative Inventories Report from the DOE. Crude stockpiles declined less than anticipated, refinery utilization dropped and the rate of US production climbed to another fresh multi-decade high. This suggests crude’s rebound is more reflective of a corrective bounce / profit taking. Rather than a shift in the supply glut story, which may in turn limit the extent of a recovery.
Finally, natural gas may be in store for further volatility on the back of upcoming storage data. The winter drawdown has begun as chilly weather sweeps across the US. Yet prices for the energy commodity may remain under pressure if the pace of stockpile declines is moderate compared to prior years.
ECONOMIC EVENTS
Please refer to the DailyFX Economic Calendar for the events over the session ahead.
Market Movements (Wed 17 Dec, 2014, Close 5PM EST)
Energy
Open
High
Low
Close
$ Chg.
% Chg
US Oil
55.4
58.94
54.19
55.88
0.48
0.87%
UK Oil
59.82
63.38
58.7
60.64
0.82
1.37%
Natural Gas
3.621
3.72
3.61
3.69
0.06
1.77%
Metals
Open
High
Low
Close
$ Chg.
% Chg
Gold
1,196.81
1,202.82
1,183.50
1,189.05
(7.76)
-0.65%
Silver
15.69
16.03
15.60
15.70
0.01
0.08%
Palladium
781
791.5
773.7
776.7
(4.30)
-0.55%
Platinum
1,195.80
1,205.40
1,188.50
1,190.30
(5.50)
-0.46%
Copper
2.86
2.89
2.83
2.88
0.01
0.49%
CRUDE OIL TECHNICAL ANALYSIS
Crude remains locked in a downtrend as signaled by the 20 SMA and ROC indicators. A Doji has emerged on the daily, yet an absence of more definitive reversal signals suggests a sustained recovery may be unlikely at this stage. At the same time a small corrective bounce should not be precluded given the extent of recent declines. Sellers may look to keep the commodity capped below the 60.74 mark. Meanwhile, the next downside target is offered by the April ’09 Low at 46.70.
Crude Oil: Eyes April ’09 Low Amid Persistent Downtrend
Daily Chart – Created Using FXCM Marketscope 2.0
GOLD TECHNICAL ANALYSIS
Gold is keeping traders in suspense near the 1,187 floor. Signs of a short-term downtrend appear to be re-emerging (ROC dipping into negative territory, prices below 20 SMA). This suggests a break lower would potentially open a retest of the recent lows near 1,137.
The DailyFX SpeculativeSentimentIndex suggests a mixed bias for gold based on trader positioning.
Gold: Awaits Break Below Nearby Floor To Recast Risks Lower
Daily Chart – Created Using FXCM Marketscope 2.0
SILVER TECHNICAL ANALYSIS
Silver’s intraday rebound is producing a Morning Star formation which awaits confirmation from the close of the current candle and a successive up-session. Yet trend indicators remain in negative territory (including the ROC and 20 SMA). This suggests risks are skewed to the downside for the time-being. Further; the breach of the psychologically-significant 16.00 handle has put the spotlight back on the 15.00 floor.
Silver: Eyes 15.00 Handle As Trend Indicators Turn Lower
Daily Chart – Created Using FXCM Marketscope 2.0
COPPER TECHNICAL ANALYSIS
Signs of a downtrend from the 20 SMA and ROC have resurfaced for copper, suggestingthe risks are likely skewed lower. This in turn keeps the June ’10 low in sight with sellers sitting nearby at the 2.96 ceiling. However, caution is still suggested when adopting fresh positioning – given the commodity’s tendency towards whipsaws over recent months.
Copper: Sights Set On June 2010 Low
Daily Chart – Created Using FXCM Marketscope 2.0
PALLADIUM TECHNICAL ANALYSIS
The 50% Fib. has kept palladium capped as signs of a shift towards a downtrend re-emerge. The slide under buying interest at 792 may be the precursor to a greater descent towards the recent lows near 727. However, the 23.6% Fib now appears to be offering some support, which has prompted the appearance of an Inverted Hammer formation. If confirmed by a successive up-period it could herald a small corrective bounce.
Palladium: Inverted Hammer Awaits Confirmation Near Key Fib Level
Daily Chart – Created Using FXCM Marketscope 2.0
PLATINUM TECHNICAL ANALYSIS
Platinum continues to keep us in suspense near the 1,185 barrier, which has kept the commodity supported over recent months. Trend indicators have again turned lower. This suggests a breach of the nearby barrier could open the door to a descent on the July ’09 low near 1,101. However, an Inverted Hammer should be monitored for confirmation from an ensuing up-day, which in turn would warn of a small base.
Platinum: Awaits Breach Of Nearby Support Barrier
Daily Chart – Created Using FXCM Marketscope 2.0
Written by David de Ferranti, Currency Analyst, DailyFX
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Source: Daily fx
