IBT: Crude Oil, Gold May Rise as Risk Appetite Ends Week on the Upswing
Commodities are treading water ahead of the opening bell on Wall Street as traders wait for the release of the University of Michigan’s gauge of US Consumer Confidence. Sentiment is expected to nudge lower in October after hitting a four-month high in the previous month. Markets continue to hope a firmer US recovery will help offset headwinds from a recession in Europe and a slowdown in Asia. This means soft data from the world’s top economy is likely to carry negative implications for risk appetite.
Such an outcome may weigh on cycle-sensitive crude oil and copper prices while gold and silver come under pressure as safe-haven flows buoy the US Dollar. With that said, US economic data has generally tended to surpass expectations by an increasing margin over recent weeks (according to data from Citigroup), meaning the probability of a sentiment-supportive upside surprise appears credible. Indeed, S&P 500 stock index futures are pointing higher ahead of the opening bell on Wall Street, pointing to a risk-on mood that may push commodities higher into the end of the trading week.
Prices are testing resistance at the would-be neckline of an inverse Head and Shoulders bottom (92.58), with a break higher implying a measured upside target at 98.10. Support stands at 87.66, the 38.2% Fibonacci retracement. A drop below that targets the 50% level at 83.76.
Prices pushed lower to support at the bottom of a bearish Rising Wedge chart pattern (1761.49) after putting in a Dark Cloud Cover candlestick pattern at resistance in the 1790.55-1802.80 area. Negative RSI divergence argues in
