Talking Points:

  • Gold prices fall as North Korea worries fade, Yellen talks up rate hikes
  • Crude oil price pullback undone as API shows surprise inventory draw
  • EIA data may boost oil as gold digests ahead of US GDP, PCE reports

Gold prices retreated worries about worries about the war of words between the US and North Korea faded while Fed Chair Janet Yellen struck a modestly hawkish tone in a much anticipated speech (as expected). FOMC rate hike prospects remain in focus. Another batch of speeches from Fed officials will cross the wires alongside statistics on durable goods orders and pending home sales.

The speaking schedule is packed with familiarly dovish-leaning officials this time around and markets seem unlikely to pay much heed as they rehash familiar tropes. As for the data docket, the offering of second-tier releases seems unlikely to inspire directional conviction ahead of the more directly policy-relevant GDP and PCE numbers due later in the week. On balance, that may put gold in digestion mode in the near term.

Crude oil prices corrected modestly lower for much of yesterday’s session following explosive gains in the wake of the Kurdish independence referendum. That proved unsustainable however as API reported that US inventories shed 765k barrels last week, a stark contrast with calls for a 2.5 million barrel build expected to be reported in official EIA figures due today. That saw most intraday losses vanish.

Buyers may return to the offensive if the EIA report hews closer to the API projection, hinting that the impact of hurricane-related refining capacity disruptions are fading faster than expected. Large drawdowns of gasoline and distillate stocks may be enough to deliver that message even if the headline crude storage numbers don’t comply however.

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

GOLD TECHNICAL ANALYSISGold prices erased a would-be upside breakout, sinking back toward monthly lows. A daily close below the September 21 low at 1288.28 exposes a support shelf at 1270.82. Alternatively, a move above the 23.6% Fibonacci expansion at 1323.83 targets the 38.2% level at 1346.09.

Gold Prices Fall on Easing North Korea Fears, Hawkish Yellen

Chart created using TradingView

CRUDE OIL TECHNICAL ANALYSISCrude oil prices paused to consolidate gains after clearing the May 25 highat 51.97. From here, the next layer of resistance lines up in the 53.74-54.48 area. Alternatively, a move back below 51.97 paves the way for another challenge of the August 1 high at 50.40.

Gold Prices Fall on Easing North Korea Fears, Hawkish Yellen

Chart created using TradingView

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

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