Market Overview

Crude Oil Chart Setup Calls for Losses, Gold Standstill Continues

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Crude oil technical positioning is pointing to losses ahead, an outlook in line with a re-coupling to the S&P 500. Meanwhile, gold prices continue to look for clear direction.

Commodities – Energy

Crude Oil Chart Setup Calls for Losses

WTI Crude Oil (NY Close): $101.93 // +1.19 // +1.18%

As we suspected, crude prices re-coupled with the overall trends in investors' risk appetite and followed the S&P 500 higher on Thursday. Notably, the move higher remained within the context of the larger bearish setup we have monitored for several weeks. Indeed, so long as a daily close above $103.30 does not materialize, the current setup presents a continuation triangle chart formation that argues for a resumption of the down move initiated on May 2nd following a period of consolidation. A break through support at the triangle bottom initially exposes supports at $96.43 and $92.54.

Crude_Oil_Chart_calls_for_Losses_Gold_Standstill_COntinues_body_Picture_3.png, Crude Oil Chart Setup Calls for Losses, Gold Standstill Continues

Commodities – Metals

Gold, Silver Standstill Continues

Spot Gold (NY Close): $1544.10 // +6.45 // +0.42%

Broadly speaking, gold prices remain at a standstill between$1533.12 and $1549.91, the 61.8% and 76.4% Fibonacci retracements of the drop from the May 2 high, respectively. As we discussed in our weekly forecast, this apparent indecision reflects lingering uncertainty about gold's place in today's bipolar marketplace, where most assets are clearly established on the “risky” or “safe-haven” side of the spectrum.

Ultimately, as we noted yesterday: “the key question at this point is whether the bearish cues now apparent in S&P 500 positioning owe to the unwinding of Dollar-funded positions as QE2 expires (a gold-negative scenario) or to a dour outlook on US economic growth (a gold-positive scenario).” Interestingly, once gold invariably chooses a directional bias, this is likely to inform our understanding of how the market gauging the key drivers of risk appetite, yielding welcome insights into the behavior of a multitude of asset classes.

Crude_Oil_Chart_calls_for_Losses_Gold_Standstill_COntinues_body_Picture_4.png, Crude Oil Chart Setup Calls for Losses, Gold Standstill Continues

Spot Silver (NY Close): $37.56 // +0.73 // +1.98%

As with gold, silver is finding it difficult to find its place in the current market environment. Technically speaking, a triangle continuation pattern is taking shape below the 38.2% Fibonacci retracement of the drop the late April high at $38.88, with the preceding decline arguing for renewed selling ahead. Initial support lines up at $36.37, the 23.6% Fib, followed by the triangle's lower boundary as well as the minor 14.6% retracement level at $34.83. A daily close below the latter boundary exposes the May 12 low at $32.32.

Crude_Oil_Chart_calls_for_Losses_Gold_Standstill_COntinues_body_Picture_5.png, Crude Oil Chart Setup Calls for Losses, Gold Standstill Continues

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