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GOLD & CRUDE OIL TALKING POINTS:

  • Gold prices edge up as bond yields drop but range resistance holds
  • Crude oil prices plunge through key support as market mood sours
  • Commodities may fall further on Fed outlook, another risk-off push

Gold prices edged higher as a stalling US Dollar allowed the metal space to capitalize on falling bond yields amid aggressive risk aversion. Lower lending rates are a standby lifeline for non-interest-bearing and inflation-hedge assets. The Greenback’s standstill seemed to reflect the dampening effect of a steep drop against the perennially anti-risk Yen on its own haven appeal.

Sentiment-sensitive crude oil prices tracked shares lower. A late-day rebound in the latter was not matched however after API inventory flow data said stockpiles added a hefty 9.88 million barrels last week. That contrasts unfavorably with expectations calling for a 3.5 million barrel increase to be reported in official EIA statistics due on Wednesday.

COMMODITIES MAY FALL ON FED RATE HIKE BETS, RISK AVERSION

Besides that bit of data, the Fed’s Beige Book survey of regional economic conditions as well as October’s US PMI roundup are due to cross the wires. If the former reinforces policymakers’ hawkish disposition while the latter avoids any improbably dismal disappointments, a rejuvenated Dollar may rise alongside firming rate hike bets and punish gold.

That might reinforce the risk-off push already telegraphed in bellwether S&P 500 futures. They are pointing convincingly lower before Wall Street comes online. Cycle-sensitive crude oil prices may continue to suffer against such a backdrop.

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

GOLD TECHNICAL ANALYSIS

Gold prices continue to struggle for direction below resistance in the 1235.24-41.64 area but negative RSI divergence still warns that a top may be forming. Breaking below resistance-turned-supportin the 1211.05-14.30 zone on a daily closing basis exposes the September 28 low at 1180.86 next. Alternatively, a breach above 1241.64 paves the way for a challenge of the 1260.80-66.44 region.

Gold price chart - daily

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices crashed through support guiding them higher since early February, opening the door for a test of the 64.26-45 zone. Pushing further beyond that exposes April’s swing bottom at 61.84. Alternatively, a move back above former support – now in the 66.77-68.67 area – opens the door for a retest of the 70.05-26 region. The breakdown marks a big step toward realizinglonger-term bearish reversal cues but confirmation on a closing basis remains pending.

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