Talking Points:
- Gold prices drop through range floor on Glencore output sale
- Crude oil prices resume descent as EIA reports inventory build
- Yellen speech may overshadow US Durable Goods Orders data
Gold prices turned sharply lower following news that Glencore Plc agreed to sell A$880 million in future output to Evolution Mining Ltd, Australia’s second-largest producer. The latter firm said this would boost their overall output for the current fiscal year to as much as 860k ounces. That would amount to a 7 percent gain from the prior year.
Crude oil prices also declined after weekly EIA inventory data revealed a build of 2.5 million barrels. Economists were expecting a drawdown of 850k but a private-sector estimate from API published yesterday foreshadowed the direction of the outcome (albeit not the magnitude), pointing to a gain of 4.46 million barrels.
Looking ahead, July’s US Durable Goods Orders report headlines the economic calendar, with forecasts pointing to a 3.4 percent gain after a 3.9 percent decline in the prior month. The outcome seems unlikely to generate lasting follow-through however as investors wait to hear a much-anticipated speech from Fed Chair Janet Yellen on Friday before showing directional conviction.
Are gold and crude oil trends matching DailyFX analysts’ expectations? Find out here !
GOLD TECHNICAL ANALYSIS – Gold prices broke out lower after two weeks of standstill, sinking to the weakest level in a month. From here, a daily close below the 1303.62-08.00 area (May 2 high, 38.2% Fibonacci retracement) exposes the 50% level at 1287.29. Alternatively, a move back above support-turned-resistance in the 1329.79-33.62 zone (August 8 low, 23.6% Fib) targets a falling trend line at 1352.91.
CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices continued to push lower after signaling topping with the formation of an Evening Star candlestick pattern. Near-term support is at 46.02, the 23.6% Fibonacci expansion, with a break below that on a daily closing basis exposing the 44.20-40 area (July 11 low, 38.2% level). Alternatively, a reversal above the 14.6% Fib at 47.14 targets the August 22 high at 48.97.
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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