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CRUDE OIL & GOLD TALKING POINTS:

  • Crude oil prices edge up even as Saudi Arabia signals output boost
  • Gold prices down in risk aversion as US Dollar reclaims haven bid
  • API inventory flow data, comments from Fed officials now in focus

Commodity prices were little-changed Monday, as expected.

Crude oil prices suffered amid returning risk aversion but an intraday recovery erased losses for a near-flat close by day’s end. The bounce came after Saudi oil minister Khalid al-Falih said his country does not intend to use energy prices as political tool, intending instead to boost output to 11 million barrels per day.

That might have been seen as stretching global production capacity, leaving little room for a ramp-up in the event that global demand surprises to the upside. US output may be an insufficient offset without room for a Saudi boost as sanctions on Iran and Russiatightening and Iraq runs into infrastructure hurdles.

Meanwhile, gold prices edged down within a now-familiar range (see chart below) as the US Dollar showcased its recently reclaimed haven appeal. The Greenback rose as Wall Street closed in the red for a third consecutive session, sapping the appeal of anti-fiat assets.

API INVENTORY FLOW DATA, FED-SPEAK NOW IN FOCUS

Looking ahead, API inventory flow data is in focus for oil prices. It will be evaluated relative to expectations calling for a 3.44 million barrel build to be reported in official EIA statistics Wednesday. Comments from the sidelines of the Future Investment Initiative conference in Riyadh may also draw attention.

Meanwhile, gold will probably take cues from Fed-speak. Regional Fed presidents Neel Kashkari, Raphael Bostic and Robert Kaplan are all due to speak. If their remarks reinforce the hawkish tone on display in minutes from September’s FOMC meeting, the yellow metal may suffer.

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

GOLD TECHNICAL ANALYSIS

Gold prices remain stuck in place below resistance in the 1235.24-41.64 area but negative RSI divergence continues to warn of a downswing ahead. A daily close below resistance-turned-supportin the 1211.05-14.30 zone targets the September 28 low at 1180.86. Alternatively, a reversal back above 1241.64 opens the door for a test of the 1260.80-66.44 region.

Crude Oil Prices Pressure Key Support, API Inventory Data Due

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices are marking time at support defining the move higher since early February, now in the 66.73-68.64 area. Breaching that exposes the 64.26-45 zone. Alternatively, a turn back above the 70.05-26 region opens the door for a retest of trend line support-turned-resistance at 71.82. Thelonger-term chart setup hints a broader bearish reversal is in the works.

Crude Oil Prices Pressure Key Support, API Inventory Data Due

COMMODITY TRADING RESOURCES

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

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