Talking Points:

  • Gold prices rise as FOMC minutes highlight soft inflation worries
  • Crude oil prices mark time amid a wealth of conflicting headlines
  • US PPI and DOE oil inventory flow statistics now in the spotlight

Gold prices rose as minutes from September’s FOMC meeting revealed many Fed officials remainworried that recently low inflation is not temporary. That seemed to pour a bit of cold water on rate hike speculation, sending the US Dollar and front-end Treasury bond yields lower. Not surprisingly, this proved helpful for non-interest-bearing and anti-fiat assets epitomized by the yellow metal.

September’s US PPI data is next on tap. The headline on-year wholesale inflation rate is expected to rise to 2.6 percent, the highest since February 2012. US economic news-flow has broadly firmed relative to economists’ bets over the past four months, opening the door for an upside surprise. That might cap gold gains for now, although follow-through is likely to wait for the higher-profile CPI report due Friday.

Crude oil prices marked time as a slew of conflicting cues left prices without a clear lead. An EIA report predicted global supply and demand would soften in 2018. A competing analysis from OPEC upgraded demand estimates, citing a strengthening global economy, while lowering supply projections for producers outside the cartel. Finally, API said US inventories added 3.1 million barrels last week.

The IEA monthly report split the difference between the OPEC and EIA world views, projecting that crude prices will be broadly steady next year as demand rises alongside swing supply. Perhaps most ominously, the group said global destocking will halt in 2018, though markets took the remark in stride. Official DOE data on US inventories is up ahead, with forecasts calling for a 2.04 million barrel drop.

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

GOLD TECHNICAL ANALYSISGold prices are working on a fifth consecutive advance and testing key resistance in the 1295.46-87 area (former double top, 23.6% Fibonacci expansion). A daily close above this barrier exposes the 38.2% level at 1319.05. Trend defining support comes in at 1260.80, the October 6 low.

Gold Price Recovery May Stall Near $1300/oz on US PPI Data

Chart created using TradingView

CRUDE OIL TECHNICAL ANALYSISCrude oil prices paused to digest gains after re-establishing a foothold above the $50/bbl figure. From here, a break above the 23.6% Fibonacci expansion at 51.65 confirmed on a daily closing basis exposes the 52.83-53.22 area (September 28 high, 38.2% level). Alternatively, a reversal below the 14.6% Fib at 50.68 targets the October 9 low at 49.11 anew.

Gold Price Recovery May Stall Near $1300/oz on US PPI Data

Chart created using TradingView

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

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