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Talking Points

  • Crude Oil Consolidates As Traders Look Past Geopolitical Turmoil
  • Precious Metals Drifting Lower On Yellen-Inspired USD Strength
  • Silver Marching Towards $19.00 Alongside Bearish Tech. Signals

Crude oil traders are likely catching their breath after several weeks of sharp declines for the commodity. An absence of major oil-impacting news flow from the Middle East could leave the WTI benchmark to continue its consolidation. Yet in the absence of a material escalation of the turmoil in Iraq or Eastern Europe the fundamental drive for a sustained recovery may be lacking.

Meanwhile, the precious metals are drifting lower in Asian trading today. Broad-based US Dollar strength following the Jackson Hole Symposium over the weekend has likely weighed on gold. However, the fundamental catalysts to spur further gains for the greenback over the remainder of the session are relatively limited. US Housing data and service PMIs due in the coming hours remain on the periphery compared to labor market figures in terms of shaping policy expectations. A lackluster session for the USD could in turn afford gold and silver some breathing room.

CRUDE OIL TECHNICAL ANALYSIS

Crude is threatening a corrective bounce following the emergence of a Harami candlestick pattern on the daily. Yet odds of a more sustained recovery remain stacked against the commodity. This is in light of the sustained downtrend made evident by the descending trendline and prices holding below the 20 SMA. Sellers are likely to re-emerge at the 95.00 handle, which may offer a fresh entry into new short positions. A daily close above the trendline barrier would likely be required to signal the possibility of a more sustained shift in sentiment.

Crude Oil: Recovery May See Sellers Emerge At 95.00

Gold Resumes Descent As USD Bulls Return, Crude Oil Lacking Fuel

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD TECHNICAL ANALYSIS

A Harami pattern has emerged for gold which awaits confirmation from a successive up period before suggesting the potential for a corrective bounce. This leaves risks skewed to the downside while sub 1,280. An eventual descent on the 1,241 floor remains a possibility. However, a multi-month low for the ATR warrants some skepticism over a sustained decline, given anemic volatility readings generally do not support breakouts.

The DailyFX SpeculativeSentimentIndex suggests a bearish bias for gold based on trader positioning.

Gold: Downside Risks Remain While Sub 1,280

Gold Resumes Descent As USD Bulls Return, Crude Oil Lacking Fuel

Daily Chart - Created Using FXCM Marketscope 2.0

SILVER TECHNICAL ANALYSIS

A descending trendline on the daily continues to keep silver in check as the precious metal descends towards the 19.00 target. However, signs of hesitation from the bears are emerging. This is made evident by the ensemble of Dojis on the daily and fading momentum reflected by the Rate of Change indicator. Yet in the absence of outright bullish reversal patterns the immediate risk remains to the downside.

Silver: Slowly Marching On $19.00 Target

Gold Resumes Descent As USD Bulls Return, Crude Oil Lacking Fuel

Daily Chart - Created Using FXCM Marketscope 2.0

COPPER TECHNICAL ANALYSIS

Copper has vaulted over the critical 3.19 hurdle which may open the door to a retest of the base metal’s recent highs. The reversal follows a Bullish Engulfing formation which helped to signal a shift in sentiment for the commodity.

Copper: Sentiment Shifts As Hurdle Cleared

Gold Resumes Descent As USD Bulls Return, Crude Oil Lacking Fuel

Daily Chart - Created Using FXCM Marketscope 2.0

PALLADIUM TECHNICAL ANALYSIS

Palldium’s core uptrend remains intact following a rebound from the 200 SMA and 861 barrier. This casts the spotlight back to the metal’s recent highs at the critical 900 ceiling. A break below the ascending trend channel would be required to warn of a top.

Palladium: Rebounds With Core Uptrend Intact

Gold Resumes Descent As USD Bulls Return, Crude Oil Lacking Fuel

Daily Chart - Created Using FXCM Marketscope 2.0

PLATINUM TECHNICAL ANALYSIS

An absence of bullish reversal signals and presence of a sustained downtrend for Platinum may yield further declines for the commodity. A daily close below the 1,424 floor opens a knock on the 1,395 barrier. However, after ten straight days of declines a corrective bounce seems overdue at this point. A more sustained recovery would require a leap over the descending trendline.

Platinum: Targeting 1,395 With Bearish Signals Intact

Gold Resumes Descent As USD Bulls Return, Crude Oil Lacking Fuel

Daily Chart - Created Using FXCM Marketscope 2.0

Written by David de Ferranti, Currency Analyst, DailyFX

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Contact and follow David on Twitter: @DaviddeFe

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