Crude Oil to Follow S&P 500 Lower, Gold Threatens Record High

Crude oil prices are set to follow the S&P 500 lower as risk aversion grips markets anew while safe-haven demand promises another record high for gold.

Talking Points

• Crude Oil Under Pressure as Risk Aversion Heats Up Anew
• Gold Threatens Swing High as Safe-Haven Flows Return

WTI Crude Oil (NY Close): $87.58 // +0.93 // +1.07%

Crude prices continue to track broad-based risk appetite trends, with a pullback seemingly in the cards as S&P 500 stock index futures trade aggressively lower ahead of the opening bell on Wall Street. All eyes are on US Consumer Price Index figures and the Philadelphia Fed Business Confidence gauge.

The former reading is set to show core inflation rose to the highest since November 2009, reinforcing the likelihood of a Federal Reserve firmly on hold for the time being, while the latter sees business sentiment slump again in August having bounced in the previous month. Yesterday's Standard and Poor's report slashing the 2011-13 US growth outlook hasn't helped either, putting macro-economic worries firmly back into the spotlight.Remarks from New York Fed President Bill Dudley are also due to come across the wires.

Prices produced a bearish Shooting Star candlestick pattern below resistance at $88.14, the 50% Fibonacci retracement level, hinting the upswing from the 8/9 low may be nearing exhaustion. Near-term support lines up at $85.20, the 38.2% Fib. Alternatively, renewed upside momentum above immediate resistance exposes $91.07. As with the S&P 500, gains are seen as corrective within the context of a larger decline.

Spot Gold (NY Close): 1791.25 // +5.55 // +0.31%

The turn lower in risk appetite ahead of the opening bell in North America has catalyzed gold higher anew as safe-haven flows pour back into the yellow metal. An invalidation of the Dark Cloud Cover candlestick pattern noted several days ago with a close above the 8/11 high at $1814.55 exposes Fibonacci extension resistance levels at $1826.37 and $1850.86. As with crude, all eyes are on the US CPI and Philly Fed readings as well as comments from New York Fed President Bill Dudley.

Spot Silver (NY Close): $40.33 // +0.44 // +1.10%

Correlation studies suggest silver's sensitivity to macro-level market trends continues to wane, with the metal seemingly marching to the beat of its own drum. The Head and Shoulders bottom we have been monitoring over recent days looks to have been validated with a break above neckline resistance at $39.82, exposing a measured upside target at $42.64.

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