Talking Points:
- Crude oil prices pressured but chart setup hints at recovery potential
- Gold prices continue to sink as US election boosts Fed rate hike bets
- Fed-speak returns to the spotlight, may boost post-election dynamics
Gold prices continue to face heavy selling pressure as traders price in a steeper Fed rate hike path in the aftermath of last week’s US presidential election. Crude oil finished last week on the defensive after the IEA warned a global supply glut may persist despite OPEC efforts to negotiate coordinated output cuts. Bets on a more aggressive Fed tightening effort may have also contributed, driving the US Dollar higher and putting de-facto pressure on USD-denominated commodity prices. Fed-speak enters the spotlight in the hours ahead, with comments echoing officials’ cautiously hawkish tone ahead of last week’s vote likely to bode ill for precious metals and energy prices alike.
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GOLD TECHNICAL ANALYSIS – Gold prices are eyeing support near the $1200/oz figure after dropping to a five-month low. Breaking below the May 30 bottom at 1199.55 on a daily closing basis exposes the 123.6% Fibonacci expansion at 1171.83. Alternatively, a reversal above the 76.4% level at 1234.97 targets the 61.8% Fib at 1254.50.
CRUDE OIL TECHNICAL ANALYSIS – Prices are pressuring support near the $43/bbl figure once again but positive RSI divergence hints downside momentum may be fading. A daily close below the 42.73-43.02 area (38.2% Fibonacci expansion, September 1 low) exposes the 50% level at 41.74. Alternatively, a reversal above the 23.6% Fib at 43.95 targets the 14.6% expansion at 44.70.
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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