Prices are reversing lower toward Fibonacci expansion support at $96.89 re-tested the underside of a triangle consolidation pattern that had been resolved to the downside on Monday, with sharp losses on S&P 500 stock index futures indicating the spectrum of so-called “risky assets” (including crude) are likely to face acute selling pressure after the opening bell on Wall Street.
The dour mood is being chalked up to news that EU finance ministers were unable to overcome an impasse over a new round of aid for Greece at an emergency meeting in Brussels yesterday, a seemingly likely explanation considering periphery Euro Zone CDS rates (representing the cost of insuring against a default in any of the “PIIGS” countries) are pushing firmly higher in European trade. News that China raised bank reserve requirements to a record high could not have been helpful either, especially considering markets had hoped Beijing would slow the pace of tightening in the aftermath of the economic data releases unveiled earlier the week.
A break through immediate support exposes $94.52 and $92.15. US Consumer Price Index and Industrial Production figures as well as official DOE weekly inventory numbers are on tap to cross the wires.
Commodities – Metals
Gold Under Pressure as Dollar Gains on Risk Aversion
Spot Gold (NY Close): 1523.78 // +7.68 // +0.51%
Prices are reversing lower anew having re-tested broken support-turned-resistance at the intersection of the 23.6% Fibonacci expansion level ($1526.28) and a major rising trend line established from late January. Risk aversion appears to be bleeding into gold prices via the US Dollar: the drop in confidence alluded to by the sharp overnight decline in S&P 500 stock index futures is feeding safe-haven demand for the greenback; gold is priced in terms of Dollars, so a move higher in the US currency is amounting to de-facto selling pressure on the yellow metal. A break through the 38.2% expansion at $1509.49 exposes the 50% level at $1495.92.
As with gold, silver is positioned to turn lower once again having re-tested support-turned-resistance at the 23.6% Fibonacci expansion level ($35.53) as risk aversion encourages gains in the US Dollar and pushes prices lower in the process. From here, the bears are poised to challenge the 38.2% expansion level at $33.09, with a break below that exposing $31.12.
