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CRUDE OIL & GOLD TALKING POINTS:

  • Crude oil prices may fall further on EIA output, inventory flow statistics
  • Gold prices fall as US Dollar pivots from haven- to yield-based support
  • Financial markets might default to risk aversion absent clear catalysts

Crude oil prices fell amid worries about global oversupply. BP reported that its refineries increased output at the fastest rate in 15 years in the third quarter while API predicted that US stockpiles added 5.69 million barrels last week, topping market expectations.

Gold prices fell as recovering risk appetite bolstered Fed rate hike bets, pulling the US Dollar upward and tarnishing anti-fiat alternatives. It seemed unlikely that the Greenback could pivot from the role of liquidity haven to that of yield-seeking asset overnight, but that appears to be exactly what happened.

CRUDE OIL PRICES MAY FALL ON EIA OUTPUT, INVENTORY DATA

Looking ahead, a pair of EIA reports – one tracking monthly energy output and the other weekly inventory flows – enter the spotlight. If the former underscores swelling US output while the latter echoes API’s projection and tops forecasts calling for a 3.1 million barrel build, oil prices may fall further.

Meanwhile, gold prices might take a bit of time to consolidate as the economic calendar is cleared of high-profile event risk. Sentiment trends may re-emerge as a catalyst but bellwether S&P 500 futures are trading conspicuously flat, hinting at the absence of a strong directional bias (at least for now).

Still, it is worthwhile to keep in mind that the path of least resistance appears to favor a risk-off bias in the current market environment. If this has markets default to liquidation, gold might manage a tepid recovery as bond yields drop. Renewed haven-linked support for USD may cap gains however, as it has previously.

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

GOLD TECHNICAL ANALYSIS

Gold prices pulled back from resistance in the 1235.24-41.64 area, as expected. From here, breaking below the 1211.05-14.30 zone on a daily closing basis sees the next downside barrier at 1180.86, the September 28 low. Alternatively, a move above 1241.64 exposes the 1260.80-66.44 zone next.

Gold price chart - daily

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices are pulling back after testing resistance guiding October’s downswing. A daily close below the October 23 low at 65.77 opens the door for a test of the 64.26-45 area. Alternatively, a move above the upper layer of support-turned-resistance set from February, now at 68.88, exposes the 70.05-26 zone. Weekly chart positioning suggests a longer-term top is in place.

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