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Talking Points

  • Crude Oil Traders To Keep One Eye On Escalating Ukrainian Turmoil
  • Gold Weighed On By A Stronger Greenback Despite Absence of Major Data
  • Palladium Targeting 1,000 After Leaping Over The 900 an Ounce Hurdle

US Dollar strength has weighed on gold in Asian trading today. The greenback bulls have returned despite a lack of major supportive news flow from the US overnight given the Labor Day holiday. The trading lull on Monday may have proven to be the calm before the storm as US traders return ahead of a busy week for economic events.

Over the session ahead US ISM Manufacturing figures headline the docket. Yet the leading indicator is on the periphery for Fed policy makers with their core focus remaining on the labor market. This suggests the impact on policy expectations and thus the US Dollar could prove limited. Nonetheless, the potential for further greenback strength should not be discounted given its strong performance today despite a lack of data flow from the region.

Tensions in Eastern Europe are also likely to remain on the radar for commodity traders. Yet the latest flare-up has proven insufficient to dramatically bolster safe-haven demand for gold and silver. At this stage it appears only a significant escalation and greater international response could generate significant gains for the alternative assets.

Mounting speculation over sanctions on Russian energy exports may offer the Brent benchmark some short-term support. Additionally, as the world’s largest producer of palladium the precious metal could be afforded some further gains. However, traders should be mindful that such fear-driven positioning may be quickly unwound if supply disruption concerns are not realized.

UPCOMING ECONOMIC DATA

Gold Slides As US Dollar Bulls Return Following Holiday Lull

Source:DailyFX Economic Calendar, Times In GMT

CRUDE OIL TECHNICAL ANALYSIS

Crude is at a critical juncture as the commodity threatens to clear the 23.6% Fib and descending trendline on the daily. A break through the nearby barrier would be required to mark a small base and threaten a more sustained recovery for the commodity. However, signs of hesitation from the bulls are made evident by a Doji candlestick. If a more definitive reversal signal emerges it would be seen as an opportunity to enter new short positions.

Crude Oil: Make-Or-Break Moment For WTI

Gold Slides As US Dollar Bulls Return Following Holiday Lull

Daily Chart - Created Using FXCM Marketscope 2.0

GOLD TECHNICAL ANALYSIS

Gold’s recovery appears to have lost momentum as denoted by a pair of Dojis on the daily. Yet buying interest at the 1,280 floor and a low ATR reading suggests the potential for the commodity to remain elevated.

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

Gold: Bulls Lose Steam Above 1,280 Floor

Gold Slides As US Dollar Bulls Return Following Holiday Lull

Daily Chart - Created Using FXCM Marketscope 2.0

SILVER TECHNICAL ANALYSIS

The tug-of-war between the silver bulls and bears sub 19.50 continues. A parade of Doji formations suggests indecision from traders and does little to confirm a clear directional bias for the precious metal. A daily close above the nearby barrier would suggest a small base and open the potential for a greater recovery.

Silver: Dojis Denote Indecision From Traders Near 19.50 Barrier

Gold Slides As US Dollar Bulls Return Following Holiday Lull

Daily Chart - Created Using FXCM Marketscope 2.0

COPPER TECHNICAL ANALYSIS

A sharp correction for Copper has yielded a Bearish Engulfing formation that may warn of further weakness. This could set the commodity up for a retest of its recent lows near the 3.08 floor. However, a clean run towards the target may prove difficult given the commodity’s recent tendency to whipsaw in intraday trade.

Copper: Cautiously Eyeing Recent Lows Following Bearish Reversal Signal

Gold Slides As US Dollar Bulls Return Following Holiday Lull

Daily Chart - Created Using FXCM Marketscope 2.0

PALLADIUM TECHNICAL ANALYSIS

Palladium has cracked the 900 target offered in recent commodities reports. With the core uptrend intact the upside break opens the next psychologically-significant 1,000 handle. While a Doji suggests some hesitation from the bears, a void of classic reversal patterns casts some doubt on the possibility of a correction.

Palladium: Smashes Through 900 Target With Core Uptrend In Force

Gold Slides As US Dollar Bulls Return Following Holiday Lull

Daily Chart - Created Using FXCM Marketscope 2.0

PLATINUM TECHNICAL ANALYSIS

Platinum continues its struggle to clear the 1,424 hurdle. An ensemble of Dojis suggests hesitation from the bulls to break through the nearby ceiling. Against the backdrop of a core downtrend this leaves shorts preferred. A climb over the descending trendline would be required to warn of a base and the possibility of a sustained recovery.

Platinum: Sellers Reemerge At 1,424 Ceiling

Gold Slides As US Dollar Bulls Return Following Holiday Lull

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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