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Talking Points:

  • Crude oil prices erase intraday drop on supportive EIA inventory data
  • Gold prices capped at resistance as US wholesale inflation accelerates
  • US CPI statistics, Trump speech on Iran policy in the spotlight ahead

Crude oil prices attempted to reverse lower but the down move was arrested by upbeat EIA inventory flow data. The report showed that stockpiles shed 2.75 million barrels last week, an outflow in excess of the 2.04 million drop projected by economists and a far cry from the build foreshadowed in analogous API figures. Traders seemed to be unfazed by an unexpected 2.49 million surge in gasoline storage.

Baker Hughes rig count data as well as ICE and CFTC speculative positioning statistics round out scheduled event risk for the week, but these are rarely market-moving. Geopolitical instability jitters may take top billing and offer prices a boost if US President Trump uses a much-anticipated speech to say he will “decertify” an Obama-era US/Iran accord exchanging sanctions relief for nuclear disarmament.

Gold prices probed higher but most of the day’s advance evaporated after September’s US PPI data crossed the wires. The report showed that core wholesale inflation unexpectedly rose to an on-year rate of 2.2 percent, the highest since May 2012. Follow-through proved tepid however, with markets seemingly waiting for the more potent CPI statistics before committing (as expected).

The headline year-on-year price growth measure is projected to hit 2.3 percent, marking a six-month high. An outcome echoing steady improvement in US news-flow relative to median forecasts over the past four months may breathe new life into Fed rate hike speculation, boosting the US Dollar and Treasury yields alike to the detriment of anti-fiat and non-interest bearing assets including the yellow metal.

Retail traders expect gold prices to rise. Find out here what this hints about the actual price trend!

GOLD TECHNICAL ANALYSISGold prices remain capped by resistance in the 1295.46-87 area (former double top, 23.6% Fibonacci expansion). A break higher confirmed on a daily closing basis targets the 38.2% level at 1319.05. Critical support continues to be found at 1260.80, the October 6 low.

Crude Oil Prices Brace for Trump Speech on US Iran Policy

Chart created using TradingView

CRUDE OIL TECHNICAL ANALYSISCrude oil prices are still in digestion mode after clawing their way back above the $50/bbl threshold. A break above the 23.6% Fibonacci expansion at 51.65 opens the door for a test of the 52.83-53.22 area (September 28 high, 38.2% level). Alternatively, a daily close back below the 14.6% Fib at 50.68 paves the way for a retest of the October 9 low at 49.11.

Crude Oil Prices Brace for Trump Speech on US Iran Policy

Chart created using TradingView

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

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