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CRUDE OIL & GOLD TALKING POINTS:

  • Crude oil prices decline with stocks to test 8-month trend support
  • Gold prices stuck as Fed-linked risk aversion drives down yields
  • Key stock index futures hint corrective sentiment recovery on tap

Crude oil prices sank amid broad-based risk aversion, with the WTI contract tracking US stock index futures downward. Gold prices struggled for direction, as expected. Souring sentiment drove down bond yields and offered a degree but the metal made little headway. That hardly seems surprising considering worries about the pace of Fed interest rate hikes appear to be a leading headwind for risk appetite.

CRUDE OIL MAY RISE AS GOLD RETREATS IN RISK-ON TRADE

From here, a lull in top-tier scheduled event risk may open the way for corrective price action ahead of the week-end. Futures tracking the bellwether FTSE 100 and S&P 500 stock indexes are pointing tellingly higher before London and New York come online, hinting at risk recovery ahead. That might see crude recover alongside shares while gold backtracks. Lasting follow-through on such moves is unlikely however.

See our gold forecast to learn what is likely to drive price action through year-end!

GOLD TECHNICAL ANALYSIS

Gold prices are noncommittal below resistance in the 1235.24-41.64 area but negative RSI divergence continues to warn of a downturn ahead. A daily close below resistance-turned-supportin the 1211.05-14.30 zone exposes the September 28 low at 1180.86. Alternatively, a turn above 1241.64 opens the door for a test of the 1260.80-66.44 region next.

Gold price chart - daily

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices are testing support guiding the uptrend since early February, now in the 66.66-68.53 area. A daily close below that paves the way to challenge the support shelf in the 64.26-45 zone. Alternatively, a move back above the 70.05-26 region clears the way for a retest of trend line support-turned-resistance at 71.51.The longer-term chart setup suggests a longer-term top may be forming.

Crude oil price chart - daily

COMMODITY TRADING RESOURCES

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

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter