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Gold, Crude Oil Prices May Overlook US Jobs Data on Election Jitters

Gold, Crude Oil Prices May Overlook US Jobs Data on Election Jitters

2016-11-04 08:48:00
Ilya Spivak, Head Strategist, APAC
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Talking Points:

  • Gold prices post longest rally in 4 months, challenge $1300/oz figure
  • Crude oil prices decline for a fifth consecutive day amid risk aversion
  • US labor-market data may be to be overshadowed by election jitters

Gold prices continued to push higher as narrowing polls ahead of next week’s US presidential election stocked uncertainty and unnerved investors, sinking the US Dollar and fueling broad-based risk aversion. Crude oil prices succumbed to the overall risk-off dynamics, with the WTI benchmark tracking the S&P 500 downward.

October’s US Employment data is now in focus. A broadly on-trend nonfarm payrolls gain of 173k is expected while the jobless rate is seen retreating to 4.9 percent. Dramatic deviations aside, such a result seems adequate to keep the Fed on track for a rate hike in December. Under normal circumstances, this might have put pressure on gold and perhaps crude oil as well considering WTI is priced in USD terms.

The circumstances are far from normal however. Having been mostly sanguine for about the election since the beginning of the year, investors now seem genuinely worried that the poll’s outcome may rout financial markets and derail Fed tightening. This means that supportive economic data may almost moot, overshadowed by whatever election-related headline emerges as the leading story on the day.

Identify and track short-term gold and crude oil trading patterns with the GSI indicator!

GOLD TECHNICAL ANALYSISGold prices rose for fifth straight day, marking the longest winning run in four months, having launched a recovery from four-month lows (as expected). A daily close above the 1303.62-08.30 area (May 2 high, 38.2% Fibonacci expansion) exposes the 50% level at 1329.01. Alternatively, a turn back below the 23.6% Fib at 1282.68 targets rising trend line support at 1268.72.

Gold, Crude Oil Prices May Overlook US Jobs Data on Election Jitters

CRUDE OIL TECHNICAL ANALYSISCrude oil prices continue to sink having established a top below the $52/bbl figure (as expected), with a five-day losing streak making for the worst performance in three months. From here, a break below the 61.8% Fibonacci retracement at 44.04 on a daily closing basis exposes the 42.18-43.02 area (76.4% level, support shelf).Alternatively, a reversal back above the 50% Fib at 45.54 targets the 38.2% retracementat 47.04.

Gold, Crude Oil Prices May Overlook US Jobs Data on Election Jitters

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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