Talking Points:

  • Gold prices may struggle for near-term direction as US jobs data nears
  • Crude oil prices look vulnerable to deeper losses but a catalyst is needed
  • See here what retail traders’ buy/sell bets hint about commodity trends

Gold prices attempted to bounce against as a lull in relevant news-flow opened the door for a correction in moves driven by the recent swell in Fed rate hike speculation. The move higher fizzled intraday however as supportive US economic data drove the US Dollar higher alongside front-end Treasury bond yields. Not surprisingly, that tarnished the appeal of non-interest-bearing and anti-fiat assets.

Looking ahead, data on US factory and durable goods orders is due to cross the wires. Barring wild deviations from consensus forecasts however, the yellow metal seems unlikely to find follow-through in whatever outcomes cross the wires, with traders probably unwilling to commit to a firm bias before Friday’s official labor-market data is released. In the meantime, a period of digestion may be ahead.

Crude oil prices plunged after EIA inventory flow data crossed the wires. The report showed a far larger drawdown of raw material stocks than analysts expected, with 6.02 million barrels shed, compared to a mere 466.1k decline expected. That fell on deaf ears however as gasoline storage grew by 1.64 million barrels, topping forecasts calling for a smaller 1.04 million increase (and echoing analogous API data).

From here, a Census Bureau report on US crude oil exports through August may prove too dated to inspire a reaction from the markets. Yesterday’s EIA figures already showed that cross-border sales roared higher to 1.98 million barrels last week, the highest on record. The same report showed that output continued to climb while imports fell to the lowest on record since 1973.

Meanwhile, Saudi Energy Minister Khalid Al-Falih seemed to declare victory at meeting with his Russian counterpart in Moscow, saying the OPEC-led production cut effort “achieved its goal” and dismissing US shale growth as likely to be offset by firming demand in 2018. That seems rather bold considering WTI and Brent crude still down 6.9 and 1.5 percent in the year-to-date, respectively.

None of this seems to bode well for the broad crude oil trend. Rosy rhetoric from OPEC and company doesn’t seem to be impressing markets questioning their ability to offset US-led growth in swing output. At the same time however, nothing in the latest headlines is particularly new, meaning it may not necessarily translate into fresh near-term selling pressure without a further catalyst.

Where are crude oil and gold prices heading through year-end? See our Q4 forecasts here!

GOLD TECHNICAL ANALYSISGold prices are struggling to make upward progress having found support at seven-week lows. From here, a daily close above the 50% Fibonacci expansion at 1279.01 opens the door for a retest of the 1287.18-88.28 area (38.2% level, September 21 low). Alternatively, a turn below the October 3 floor at 1268.51 exposes the 76.4%Fibat 1260.74.

Gold Prices May Stall Ahead of US Jobs Data, Crude Oil Aims Lower

Chart created using TradingView

CRUDE OIL TECHNICAL ANALYSISCrude oil prices keep pushing lower toward support at 48.72, the 38.2% Fibonacci retracement. Breaking below that exposes 50% level at 47.46. Alternatively, a daily close back above the 23.6% Fibat 50.29 targets the 14.6% retracementat 51.26 anew.

Gold Prices May Stall Ahead of US Jobs Data, Crude Oil Aims Lower

Chart created using TradingView

--- Written by Ilya Spivak, Currency Strategist for

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