Talking Points:

  • Gold prices drop to range floor as US jobs data bolsters Fed hike bets
  • Crude oil prices rise on hopes for output cuts extension, supply jitters
  • Risk aversion might weigh on crude oil prices while gold edges higher

Gold prices fell while the US Dollar rose alongside Treasury bond yields Friday as October’s official labor-market data crossed the wires. While headline payrolls growth fell short of economists’ forecasts (261k vs. 313k expected), this was offset by a 51k revision that erased September’s shock 33k drop to show a 18k gain instead. Data for the past two months was revised up by a net 90k.

Not surprisingly, this kept the likelihood of a December Fed interest rate hike firmly in place. In fact, futures markets imply the priced-in probability of an increase at the year’s last FOMC conclave at a hefty 92.3 percent. From here, a lull in top-tier US economic data flow this week is likely to shift the spotlight to US tax reform prospects as the key driver of speculation.

Crude oil prices soared, setting a new high for the year as news of supply disruption in Nigeria and Venezuela compounded upward pressure from speculation that an OPEC-led production cut accord will be extended. A militant group in the Niger River delta said it will resume attacks on oil infrastructure while Venezuelan President Nicolas Maduro said his country will seek to restructure its global debt.

The stock of oil-specific scheduled event risk is thin until Tuesday’s API inventory flow report, which might put sentiment trends in focus. S&P 500 futures are pointing lower, hinting the WTI benchmark may pull back in broadly risk-off trade. In fact, gold may be caught up in the move as well, rising if investors’ sour mood weighs on bond yields and bolsters the appeal of non-interest-bearing and anti-fiat alternatives.

Retail traders are betting on gold gains. Find out here what this hints about on-coming price moves.

GOLD TECHNICAL ANALYSISGold prices back at familiar range support in the 1266.44-69.10 area (October 5 low, 38.2% Fibonacci expansion). A daily close below this barrier initially exposes the 50% levelat 1257.69. Alternatively, a sustained push above support-turned-resistance at 1277.16 sees the next upside threshold at 1291.06, the October 20 high.

Gold Prices May Rise Amid Risk Aversion, US Taxes Eyed This Week

Chart created using TradingView

CRUDE OIL TECHNICAL ANALYSISCrude oil prices punctured key resistance at 55.24, the January 3 high, exposing the 100% Fibonacci expansion at 56.38. A further push beyond that targets the 123.6% level at 58.10. Alternatively, a turn back below 55.24 – now recast as support – opens the door for a retest of the 76.4% Fib at 54.66.

Gold Prices May Rise Amid Risk Aversion, US Taxes Eyed This Week

Chart created using TradingView

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

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