Talking Points:

  • Crude oil prices may be more sensitive to headline risk than usual
  • Gold prices under pressure as Fed rate hike speculation heats up
  • Better-than-expected US ISM data may see gold losses accelerate

A lull in top-tier news flow left crude oil prices rudderless on Friday, with the WTI benchmark stuck in a narrow consolidation range. The docket is likewise bare at the beginning of this week, hinting at continued standstill until a fresh directional lead emerges.

With that said, the absence of an obvious focal point for speculation might make for elevated headline sensitivity. This suggests that prices may be more vulnerable to kneejerk volatility than usual in the near term, meaning traders would be wise to proceed with caution.

Gold prices were back on the defensive after a brief respite. Swelling Fed rate hike bets drove Treasury bond yields and the US Dollar higher in tandem, undermining the appeal of non-interest-bearing and anti-fiat assets epitomized by the yellow metal.

September’s manufacturing ISM survey is now in focus. It is expected to show that the pace of US factory-sector activity growth slowed last month. An upside surprise echoing steady improvement in US economic news flow relative to consensus forecasts since mid-June may compound selling pressure however.

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GOLD TECHNICAL ANALYSISGold prices are testing below support at 1279.01, the 50% Fibonacci expansion. A daily close below this barrier exposes the 61.8% level at 1270.84 next. Alternatively, a reversal back above the September 21 low at 1288.28 – now recast as resistance – targets the 23.6% Fib at 1297.28.

Crude Oil Prices Perched at Chart Support, Gold Eyes ISM Data

Chart created using TradingView

CRUDE OIL TECHNICAL ANALYSISCrude oil prices continue to test support at 51.26 (14.6% Fibonacci retracement, trend line). A break below that confirmed on a daily closing basis sees the next downside barrier at 50.29, the 23.6% level. Alternatively, a push above the September 28 high at 52.83 exposes swing highs in the 53.74-54.48 area.

Crude Oil Prices Perched at Chart Support, Gold Eyes ISM Data

Chart created using TradingView

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

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