Commodities: Gold Liquidation Accelerates, Oil Sinks With Risk Appetite

by Admin

Gold and silver selling is gaining momentum following reports of Cyprus’ liquidation while crude oil and copper are down after China’s disappointing GDP data.

Talking Points

  • Gold and Silver Accelerate Lower as Cyprus Liquidation Amplifies Downtrend
  • Crude Oil and Copper Sink as Chinese GDP Data Adds Fuel to Risk Aversion

Commodity prices are facing heavy selling pressure to start the trading week. Gold and silver prices are accelerating lower after Friday’s large move lower following news that Cyprus plans to sell its reserves to raise cash for the country’s bailout. The precious metals have trended broadly lower since late September 2012 having rallied into the Federal Reserve’s introduction of the third expansion of quantitative easing (QE3) as well-anchored inflation expectations dented anti-fiat demand. Meanwhile, crude oil and copper are down amid broad-based risk aversion in the wake of China’s GDP data.Looking ahead, S&P 500 index futures are pointing sharply lower, hinting more of the same is likely ahead.

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WTI Crude Oil (NY Close): $91.29 // –2.22 // –2.37%

Prices declined as expected after putting in a Bearish Engulfing candlestick pattern below resistance at the underside of a previously broken rising trend line set from the March 4 low. Sellers are now testing below support is at 88.77, the 100% Fibonacci expansion, with a break below that exposing the 123.6% level at 86.67. Near-term resistance is at 90.87, the 76.4% Fib.

Commodities_Gold_May_Rise_as_Crude_Oil_Declines_on_US_Data_body_Picture_4.png, Commodities: Gold Liquidation Accelerates, Oil Sinks With Risk Appetite

Daily Chart – Created Using FXCM Marketscope 2.0

Spot Gold (NY Close): $1483.00 // -78.45 // -5.02%

Prices are testing long-term support at 1397.50, the 100% Fibonacci expansion. A break lower on a weekly closing basis exposes the 123.6% level at 1303.50. The first layer of major resistance lines up at 1491.50, the 76.4% Fib.

Commodities_Gold_May_Rise_as_Crude_Oil_Declines_on_US_Data_body_Picture_3.png, Commodities: Gold Liquidation Accelerates, Oil Sinks With Risk Appetite

Weekly Chart – Created Using FXCM Marketscope 2.0

Spot Silver (NY Close): $26.01 // -1.64 // -5.94%

Prices are testing support at 24.00, the 100% Fibonacci expansion. A break downward exposes the 123.6% level at 21.32. Near-term resistance is in the 26.68-80 area, marked by a recently broken channel bottom and the 76.4% Fib.

Commodities_Gold_May_Rise_as_Crude_Oil_Declines_on_US_Data_body_Picture_2.png, Commodities: Gold Liquidation Accelerates, Oil Sinks With Risk Appetite

Weekly Chart – Created Using FXCM Marketscope 2.0

COMEX E-Mini Copper (NY Close): $3.350 // -0.084 // -2.45%

Prices are testing below support at 3.265, the 38.2% Fibonacci expansion, to challenge the 50% mark at 3.208. A break beneath the latter level targets the 61.8% Fib at 3.151. Near-term resistance is at 3.336, the 23.6% expansion.

Commodities_Gold_May_Rise_as_Crude_Oil_Declines_on_US_Data_body_Picture_1.png, Commodities: Gold Liquidation Accelerates, Oil Sinks With Risk Appetite

Daily Chart – Created Using FXCM Marketscope 2.0