Crude Oil May Rise as Gold Declines if ISM Data Outperforms

Crude Oil May Rise as Gold Declines if ISM Data Outperforms

Crude oil prices may find support as gold comes under pressure if the March US ISM Manufacturing report yields a better than expected outcome.
Talking Points
Oil, Copper and Silver Decline as Asian Economic Data Weighs on Risk Appetite
Gold May Come Under Pressure if ISM Manufacturing Data Surprises to the Upside
Sentiment-sensitive crude oil and copper prices are under pressure in early European trade as risk aversion carries over from Asian hours following disappointing Chinese and Japanese economic data releases. In the precious metals space, gold is treading water while silver continues to reflect a greater sensitivity to risk trends, trading down along with cycle-linked assets. Indeed, the correlation between the gold/silver ratio and our in-house sentiment gauge is -0.58 on 20-day studies.
Looking ahead, all eyes are on the US ISM Manufacturing data, where expectations point to a slight slowdown in sector activity in March. US economic data has tended to outperform relative to expectations over the past month however according to data compiled by Citigroup, however. More of the same this time around may help improve investors’ mood and cap risk aversion, pushing shares higher and offering support to oil, copper and silver. Implications for gold are somewhat clouded, but a particularly strong release may weigh against expectations for continued aggressive Federal Reserve stimulus and apply downward pressure on the benchmark anti-fiat asset.