Lukman Otunuga
ForexTime (FXTM)
Investor attraction towards Gold diminished rapidly during trading on Wednesday when the Federal Reserve decided to raise US interest rates for the first time in almost a decade. This commodity has been a victim to heavy depreciations from the rising optimism around a December US rate rise, and now this has become a reality, any hope for a recovery in prices before the end of the year has promptly faded. It has to be noted that the Fed did succeed in creating a controlled market reaction towards the US rate decision and this may have delayed the heavy decline which is pending on this zero yielding metal. The potential for Gold bears to install another round of selling momentum throughout metals remains live, and further Dollar appreciation should trigger a selloff in Gold granting the momentum needed for a solid decline towards 1046.
From a technical standpoint Gold is heavily bearish on the daily timeframe as there have been consistently lower lows and lower highs. Prices are trading below the daily 20 SMA and the MACD has also crossed to the downside. A breakdown below 1060 should encourage sellers to send prices towards 1046.
WTI Oil remains depressed
Sentiment towards WTI Oil received a sweeping blow during trading on Wednesday with prices lurching towards $35 following the weekly report from the Energy Information Administration (EIA) that crude inventories increased by 4.8 million barrels last week. Investor attraction towards WTI has rapidly declined,while OPEC’s decision to continue leaving production unchanged has erased any chances of a recovery in prices. Concerns about the aggressive oversupply of Oil in the markets remain at alarming levels and growing fears around the sluggish demand have encouraged sellers to relentlessly attack this commodity. With any hopes of an immediate production cut dismissed, WTI Oil is heavily bearish and this downward momentum may send prices towards the crisis lows of December 2008 at $32.40.
From a technical standpoint, on the daily timeframe, WTI is heavily bearish. Prices are trading below the daily 20 SMA and the MACD has crossed to the downside. A solid breakdown below $35 should encourage sellers to send prices towards the crisis lows of 2008 at $32.40. Lagging indicators such as the daily 20 SMA and the MACD, which also point downwards, compliment this bearish view.
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