Talking Points:

  • Crude oil prices manage to hold range support above $48/bbl
  • Gold prices drop on US CPI, retail sales figures now in focus
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Crude oil prices dipped to a three-week low as the IEA cut its forecast for demand this year and next. Losses would prove short-lived however, with the WTI contract erasing the day’s losses to finish the session with a minor gain. The bounce appears corrective after the benchmark suffered a steep drop in the prior session.

A further boost came from US President Donald Trump. He floated the possibility of resorting to a “military option” in dealing with the political crisis in Venezuela, a major oil producer. The influence of this headline was relatively modest compared with the gains that preceded it however.

Looking ahead, the EIA Drilling Productivity Report is on tap. Traders will comb through the document to inform speculation about the extent to which swelling US production will offset OPEC-led output cuts. By way of context, Baker Hughes said the number of US rigs in operation hit a two-year high last week.

Gold prices edged up as US CPI figures fell short of expectations even as they posted the first inflation pickup in five months. That weighed on Treasury bond yields and the US Dollar alike, making for a relatively supportive environment for anti-fiat and non-interest-bearing assets.

July’s US Retail Sales report is now in focus. Receipts are seen rising 0.4 percent from the prior month, the most since January. An upbeat result echoing the cautious improvement in US data flow since mid-June may boost bets on another Fed rate in 2017, sending the yellow metal lower.

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GOLD TECHNICAL ANALYSISGold prices are poised to challenge trend-defining resistance in the 1293.90-95.46 area (61.8% Fibonacci expansion, double top). A break higher confirmed on a daily closing basis exposes the 76.4% level at 1303.98. Alternatively, a turn back below the 50% Fib at 1285.74 opens the door for a retest of the 38.2% Fibat 1277.59.

Crude Oil Prices Cling to Range Floor, Gold Eyes US Retail Sales

Chart created using TradingView

CRUDE OIL TECHNICAL ANALYSISCrude oil prices continue to test range floor support marked by the 14.6% Fibonacci expansion at 48.48. A daily close below that sees the next downside barrier at 47.30 (trend line, 23.6% level). Alternatively, a turn above resistance marked the 61.8% Fib retracement at 50.19 exposes the 76.4% threshold at 52.11.

Crude Oil Prices Cling to Range Floor, Gold Eyes US Retail Sales

Chart created using TradingView

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

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