Talking Points:

  • Gold price gains may stall on services ISM, Fed Beige Book surveys
  • Crude oil price bounce may be short-lived on Hurricane Irma, Libya
  • What do retail traders’ bets say about the gold trend? Find out here

Gold prices rose for a fourth consecutive day as market sentiment soured in North American trade, sinking shares and pushing capital into the safety of government bonds. This weighed down yields, boosting the appeal of non-interest-bearing assets. Newswires chalked up investors’ gloomy mood to fresh tensions on the Korean peninsula and worries about another large storm – dubbed Hurricane Irma – menacing the US.

Fading US rate hike prospects also helped. The priced-in 2017 tightening path implied in Fed Funds futures flattened, sending the US Dollar lower and offering additional support to anti-fiat alternatives including the yellow metal. Dovish comments Minneapolis Fed President Neel Kashkari and Governor Lael Brainard probably helped on this score.

Brainard argued for caution on raising rates further until inflation is back on track, saying the underlying price growth may now be pointing lower. That marks a departure from Chair Yellen’s argument that temporary, “idiosyncratic” factors are holding back reflation and will fade over time. Kashkari was more brazen, saying rate hikes already on the books may have “done real harm to the economy”.

The spotlight now turns to August’s services ISM survey – expected to produce a rebound in the pace of sector activity growth after July’s steep slowdown – as well as the Fed’s Beige Book survey of regional economic conditions. An upbeat tone echoing broadly improving US news-flow since mid-June might slow the pace of gold gains, at least in the near term.

Crude oil prices shot upward as pipelines and refineries shuttered by Hurricane Harvey came back online, boosting demand. Gains may prove fleeting however as Irma strengthens into the most powerful storm to build in the open Atlantic Ocean while Libya moves to reopen the Shahara field,its largest. Weekly API inventory flow statistics headline the data docket.

What are the key fundamentals shaping long-term crude oil price trends? Find out here!

GOLD TECHNICAL ANALYSISGold prices are testing resistance marked by the 38.2% Fibonacci expansionat 1344.04, with a break confirmed on a daily closing basis opening the door for a test the 50% level at 1358.32. Alternatively, a turn back below the 23.6% Fib at 1326.38 – now acting as support – exposes the 14.6% expansion at 1315.49 anew.

Gold Price Rally May Stall on ISM Data, Fed Beige Book

Chart created using TradingView

CRUDE OIL TECHNICAL ANALYSISCrude oil prices punched through the 23.6% Fibonacci expansion at 47.53 to challenge the 38.2% levelat 48.75. A daily close above this barrier targets key resistance in the 49.45-73 area (7-month falling trend line, 50% Fib). Alternatively, a reversal back below 47.53 paves the way for a retest of the August 31 low at 45.57.

Gold Price Rally May Stall on ISM Data, Fed Beige Book

Chart created using TradingView

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

To receive Ilya's analysis directly via email, please SIGN UP HERE

Contact and follow Ilya on Twitter: @IlyaSpivak