Talking Points:

  • Gold prices digesting losses after dropping to five-month low
  • Crude oil prices advance on OPEC push for output cut deal
  • US retail sales data, Fed-speak may bode ill for commodities

Gold prices consolidated losses after having touched a five-month low in the aftermath of the US presidential election amid speculation that amid speculation that the on-coming policy pivot will boost inflation and encourage Fed tightening. Crude oil prices bounced amid reports that OPEC nations have re-doubled diplomatic efforts to secure a deal on output cut quotas ahead of a formal meeting later this month. The cartel unveiled the outlines of an accord in September but nailing down specifics has proven to be a challenge, as expected.

Looking ahead, US Retail Sales data and another round of Fed-speak may boost rate hike speculation, sending the US Dollar higher alongside Treasury bond yields. Gold is likely to weaken further as anti-fiat demand continues to fade in this scenario. Crude oil may also suffer as a stronger greenback puts de-facto pressure on the USD-denominated WTI benchmark, although OPEC-related news-flow and the API weekly inventory data set may disrupt prices’ response to broader trends.

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GOLD TECHNICAL ANALYSISGold prices are hovering above support near the $1200/oz figure. A daily close below the May 30 low at 1199.55 targets the 123.6% Fibonacci expansion at 1171.83. Alternatively, a move back above the 76.4% level at 1234.97 exposes the 61.8% Fib at 1254.50.

Gold Prices May Suffer Deeper Losses as Fed Rate Hike Bets Swell

CRUDE OIL TECHNICAL ANALYSISCrude oil prices may be bottoming at support near the $43/bbl as positive RSI divergence hints at ebbing selling pressure. A break back above the 23.6% Fibonacci expansionat 43.95 on a daily closing basis exposes the 14.6% level at 44.70. Alternatively, a push through support in the 42.73-43.02 area (38.2% Fib, September 1 low) targets the 50% level at 41.74.

Gold Prices May Suffer Deeper Losses as Fed Rate Hike Bets Swell

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

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