Talking Points:
- Gold prices probe range support but sentiment trends may offer support
- Crude oil prices rise as OPEC weighs output cut extension, exit strategy
- What will drive commodities through year-end? See our forecasts here
Gold prices faced renewed selling pressure as Fed rate hike speculation found fresh momentum. The US Dollar rose alongside front-end Treasury bond yields, sapping demand for non-interest-bearing and anti-fiat assets epitomized by the yellow metal.
Interestingly, hawkish sentiment did not seem linked to better-than-expected US PMI data. That suggests the seesaw in Fed-sensitive assets over the past 48 hours might reflect digestion of last week’s re-emergence of the “Trump trade” narrative.
Crude oil prices shrugged off API data showing US inventories added 519k barrels last week, rising amid news that OPEC is working on extending output cuts as well as cultivating an exit strategy. Markets seemed to read that as meaning producers won’t flood the market when the accord finally expires.
Looking ahead, a lull Fed-related news flow might see gold fall in with sentiment trends. S&P 500 futures are pointing lower, hinting that a degree of support may be found as yields pull back in risk-off trade. The possible announcement of who will be the next Fed chair has also emerged as possible wild card.
Official EIA inventory numbers are also on tap. Crude stocks are seen losing 2.78 million barrels but gasoline storage is expected to add 567.7k barrels. API said the latter shed 5.75 million barrels so it will be interesting to see how markets respond to conflicting reads on flows of raw versus refined product.
Retail traders expect gold to rise. See here what this hints about actual on-coming price moves!
GOLD TECHNICAL ANALYSIS – Gold prices are probing below range support marked by the the October 19 low at 1276.31. A break confirmed on a daily closing basis sees the next downside barrier at 1269.10, the 38.2% Fibonacci expansion. Alternatively, a turn above range resistance at 1291.06 – the October 20 high – targets the 50% Fib retracementat 1309.15.
Chart created using TradingView
CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices are inching closer to resistance in the 52.86-53.23 area (September 28 high, 38.2% Fibonacci expansion). A daily close above that exposes the 50% level at 54.51. Alternatively, a move below rising trend line support at 50.80 paves the way for a retest of the October 6 low at 49.10.
Chart created using TradingView
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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