Categorized | Technicals

Crude Oil Rises With Equities, Gold Falls on Dollar Rally

Posted on 10 August 2010 by DailyFX

Crude oil got a boost from the continued uptrend in equities, as traders consider recent weak economic data as priced in. Gold fell after the greenback rallied strongly off support.

Commodities – Energy

Crude Oil Rises With Equities

Crude Oil (WTI) – $81.08 // -$0.40 // -0.49%

Commentary: Crude oil advanced $0.78, or 0.97% on Monday, as the commodity followed equities higher. U.S. stocks, as represented by the S&P 500 index, closed at the highest level since May and have been steadily trending higher despite the release of several weak pieces of economic data. The most notable piece of data was last week’s nonfarm payrolls report. Though equities and in turn, crude oil, fell on Friday following the report, the rally on Monday enabled the assets to recoup most of those losses. We expect that risk assets will continue to be well-bid, but that crude oil will be contained below the mid-$80’s due to abundant supplies.

Technical Outlook: Unchanged from yesterday: “Prices have turned lower from resistance at $82.55, the 138.2% Fibonacci extension of the 6/28-7/6 downswing. Initial support lines up at $79.38, a barrier reinforced by the close proximity of the bottom of a rising channel set from the low in May.”

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Commodities – Metals

Gold Falls on Dollar Rally

Gold – $1200.85 // -$0.50 // -0.04%

Commentary: Gold finally registered a decline on Monday, its first in ten sessions. The metal lost $4.05, or 0.34%. The rally in the US Dollar was the most likely culprit for gold’s latest moves, as gold ETF holdings remain steady at recent lows. In the event the greenback continues to rally, gold will likely continue lower, for other than the USD’s recent weakness, there has not been much in the way of support for gold.

Technical Outlook: Unchanged from yesterday: “Prices have taken out the top of a falling channel set from the swing high in June and are now flirting with establishing a foothold above the psychologically significant $1200 figure. Continued gains expose resistance at $1215.47m with a move above that clearing the way for a challenge of the record high at $1265.30.”

Silver – $18.32 // -$0.02 // -0.11%

Commentary: Silver shed $0.13, or 0.70% in step with gold. The gold/silver ratio stands at 65.53, well within the 2010 range of 60 to 71.

Technical Outlook: Prices have stalled at resistance marked by the upper boundary of a descending triangle chart formation above support at $17.45 that has contained prices for much of the year (now at $18.51). A break below initial support at $18.17 opens the door for a move to test the $18.00 figure and another run toward $17.45. Alternatively, renewed bullish momentum would expose the $19.00 mark.

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This analysis is republished with permission from DailyFX, your source for daily forex market news and analysis. DailyFX is part of Forex Capital Markets.

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