Crude Oil, Gold Prices Edge Up as Market Turmoil Cools. Now What?

CRUDE OIL & GOLD TALKING POINTS:

• Crude oil, gold prices rise in tandem amid risk appetite recovery
• API bulletin, UofM gauge of US consumer confidence due ahead
• Stray headline flow might disrupt otherwise consolidative trading

Commodity prices corrected broadly higher amid a recovery in risk appetite, as expected. Crude oil and gold prices rose in tandem following news that China’s Vice Commerce Minister will travel to the US to restart talks following a round of tit-for-tat tariff hikes, cooling worries about further trade war escalation.

That lifted the spirits of investors previously battered by emerging market jitters triggered by rapid deterioration in US relations with Turkey. Raw materials prices slid amid broad-based de-risking across financial markets. Hopes for US/China breakthrough allowed for a partial retracement of those moves.

API BULLETIN, US CONSUMER CONFIDENCE ON TAP

Looking ahead, a monthly statistical bulletin from API will help inform evolving crude oil supply and demand expectations. The competing influence of re-imposed sanctions on Iran, the dialing back of the OPEC-led production cut scheme and rising US output make for a tricky landscape. That imbues with market-moving potential any bit of news that seems to tilt the balance in favor of one catalyst versus the others.

Meanwhile, the University of Michigan gauge of US consumer confidence is expected to show that sentiment narrowly brightened in July. All else being equal, the outcome might have influenced Fed policy expectations and thereby gold prices. A spirited response seems unlikely this time around however as markets look ahead to the US central bank’s often-pivotal Economic Symposium next week in Jackson Hole, Wyoming.

As for sentiment trends, idling S&P 500 futures point to indecision. That might translate into a consolidative tone in the final hours of the trading week, with traders pouncing on the opportunity for respite after several days of breakneck volatility. Acute sensitivity to stray headline flow is likely to remain however, warning market participants against complacency.

See our guide to learn about the long-term forces driving crude oil prices !

GOLD TECHNICAL ANALYSIS

Gold prices are digesting losses after dropping to the lowest level in 19 months. From here, a daily close below the 50% Fibonacci expansionat 1164.95 exposes the 61.8% level at 1152.60. Alternatively, a turn back above the 38.2% Fib at 1177.31 targets the 23.6% expansion at 1192.60 next.

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices stalled above support in the 63.96-64.26 area. Breaking this barrier on a daily closing basis opens the door for a test of 61.84. Alternatively, a move back above trend line support-turned-resistance at 68.44 exposes the 69.89-70.41 zone.

COMMODITY TRADING RESOURCES

• Learn what other traders’ gold buy/sell decisions say about the price trend
• Having trouble with your strategy? Here’s the #1 mistake that traders make
• Join a Trading Q&A webinar to answer your commodity market questions

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

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