Gold - $1200.95 // +$2.85 // +0.24%
Commentary: Gold continues to consolidate as investors decide which of the yellow metal's properties - its allure as a store of value, which would attach it to safe-haven assets, or its perceived attraction as an inflation, which would link it to risk appetite - are going to dominate price action in the near term. A firming inverse correlation with the VIX index of S&P 500 options volatility - investors' standby "fear gauge" - suggests the latter is the case, although the link with Treasuries (arguably the epitome of the safe-haven play) remains significant. On balance, continued consolidation seems likely with Wall Street poised to correct higher after yesterday's bloodbath, with a clear directional bias likely to emerge after a return to the emerging downtrend in risky assets.
Technical Outlook: Prices remain wedged between the broken top of a falling channel set from the swing high in June (now acting as support) at $1,132.90 and horizontal resistance at $1,215.47. A move above that barrier will open the door for a challenge of the record high at $1,265.30.
Silver - $17.90 // +$0.10 // +0.06%
Commentary: Unlike its more expensive counterpart, silver appears to have picked a side in the risk versus safety dichotomy, with prices showing a firm correlation to the MSCI World Stock Index and following shares lower in yesterday's trade. As with crude oil, this points suggests a near-term rebound is likely ahead.
Technical Outlook: Prices have been rejected lower from resistance at the upper boundary of a descending triangle chart formation that has contained prices for much of the year.The bears have driven prices below the $18.00 figure, with the door now open for a challenge of triangle support at $17.45.
Crude Oil (WTI) - $77.28 // -$0.74 // -0.95%
Commentary:Crude is increasingly tracking overall risk sentiment with the correlation between prices for the WTI contract and the MSCI World Stock Index now at 0.74, the highest in nearly three weeks, on 20-day percent change studies. This hints that a rebound may be ahead in the near term with US equity index futures now in essentially flat having recovered from deep losses (0.8 and 1.1 percent on the Dow Jones and S&P 500, respectively) in early Asian trade. The economic calendar offers little that stands in the way of the correction, with weekly US jobless claims numbers expected to print lower and seemingly nothing of particular note on the earnings calendar.
Technical Outlook:Prices have declined to meet support at the bottom of a rising channel set from the low in May. A break lower exposes the 38.2% Fibonacci retracement of the 5/20-8/4 rally at $75.82.
Ilya Spivak is currency strategist for DailyFX.
