Talking Points:

  • Gold prices rise to two-month high, buoyed by US / North Korea tensions
  • Crude oil prices track stocks lower amid risk aversion, IEA report ahead
  • What will drive longer-term commodities trends? Find our forecasts here

Geopolitical jitters continue to drive financial markets amid worries about escalating tensions between the US and North Korea, and commodities are no exception. Gold prices rose as haven-seeking capital flows buoyed Treasury bonds and sent yields lower, making the non-interest-bearing metal attractive by comparison. Risk-sensitive crude oil prices declined alongside equities.

July’s much-anticipated US CPI figures is on tap ahead. The headline inflation rate is seen rising to 1.8 percent, marking the first increase in five months. An upbeat outcome echoing broad improvement in US data outcomes relative to forecasts since mid-June might have been expected to boost Fed rate hike bets, sending gold prices lower. A lasting risk-off mood may banish any thoughts of tightening however.

As for crude, a monthly market update from the IEA is on tap. The report may highlight the inability of OPEC-led production cuts to countervail swelling US supply, echoing the cartel’s own monthly statistics published yesterday. They put July’s output at the highest yet this year as member states exempt from coordinated cuts – notably Libya – ramp up exports.

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GOLD TECHNICAL ANALYSISGold prices continue to march upward, hitting a two-month high. A break above the 50% Fibonacci expansionat 1285.74 opens the door for a test of the 1293.90-95.46 area (61.8% level, double top). Alternatively, a move back below the 38.2% Fibat 1277.59 exposes the 23.6%expansionat 1267.51 anew.

Gold Prices May Shrug Off US CPI Data as Risk Appetite Collapses

Chart created using TradingView

CRUDE OIL TECHNICAL ANALYSISCrude oil prices are testing the bottom of a two-week consolidation range. A daily close below the 14.6% Fibonacci expansion at 48.48 exposes support at 47.30 (trend line, 23.6% level). Alternatively, a reversal above the 61.8% Fib retracement at 50.19 sees the next upside barrier marked by the 76.4% threshold at 52.11.

Gold Prices May Shrug Off US CPI Data as Risk Appetite Collapses

Chart created using TradingView

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

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