Gold Prices Struggle for Direction, Chart Setup Warns of Weakness

GOLD & CRUDE OIL TALKING POINTS:

• Gold prices struggle for direction as US Dollar, Treasury yields diverge
• Crude oil prices manage tepid rebound following a test of trend support
• Risk trends may set near-term cues, S&P 500 futures signal risk-on bias

Commodity prices were in digestion mode on Friday amid a lull in top-tier scheduled event risk, as expected. Gold prices marked time amid conflicting moves in the US Dollar and bond yields. The former corrected lower, offering support for the anti-fiat yellow metal, but the latter undercut the appeal of non-interest-bearing assets. Meanwhile, crude oil prices corrected gently higher.

CRUDE OIL MAY RISE BUT GOLD TO STRUGGLE IN RISK-ON TRADE

From here, another quiet day on the calendar may allow sentiment trends to dominate. Bellwether S&P 500 futures are pointing gently higher, hinting at a cautiously risk-on bias. That might be supportive for crude oil prices but gold may continue to struggle for direction as benchmark yields and the Greenback divergence. In any case, lasting follow-through is unlikely as traders await heftier catalysts due later in the week.

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

GOLD TECHNICAL ANALYSIS

Gold prices are marking time below resistance in the 1235.24-41.64 area but negative RSI divergence hints a turn lower is brewing ahead. From here, a daily close below resistance-turned-supportin the 1211.05-14.30 zone opens the door for a test of the September 28 low at 1180.86. Alternatively, a push above 1241.64 exposes the 1260.80-66.44 region.

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices are sitting at support guiding the move higher since early February, now in the 66.70-68.60 area. A break below that targets the support shelf in the 64.26-45 zone. Alternatively, a rebound above the 70.05-26 region targets trend line support-turned-resistance at 71.68. Longer-term positioning hints a longer-term top may be taking shape.

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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