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GOLD & CRUDE OIL TALKING POINTS:

  • Gold price rise loses steam, chart setup warns of topping
  • Crude oil prices recoil from resistance near $49/bbl mark
  • S&P 500 futures pointing higher, API inventory data due

Gold prices struggled to find a lasting lead yesterday, with another foray to the upside cut short intraday as a recovery in risk appetite sent yields higher and undermined the appeal of non-interest-bearing assets. Crude oil prices suffered a similar fate, hitting a three-week high intraday only to surrender most of the advance by the close of the session.

Broadly speaking, the markets’ non-committal disposition might reflect the broad range of uncertainties muddying sentiment. A clear message on the progress of US-China trade talks now underway in Beijing is absent, a partial shutdown of the US government continues, and economic data is sending mixed signals. A gauge of US service sector activity disappointed yesterday, clashing with last week’s upbeat jobs data.

GOLD MAY STRUGGLE FOR DIRECTION, API INVENTORY DATA DUE

From here, a relatively muted data docket is likely to keep sentiment trends at the forefront. Bellwether S&P 500 futures are pointing convincingly higher, hinting a risk-on bias. That may bode ill for gold as yields continue to recover. Follow-through may be elusive yet again however, with traders reluctant to commit before Wednesday’s FOMC minutes publication and Thursday’s speech from Fed Chair Powell.

Cycle-sensitive crude oil may rise with shares if the upbeat mood is lasting but incoming API inventory statistics might muddy the waters. The private-sector estimate of last week’s net change in US stockpiles will be sized up against forecasts projecting a 10.8-million-barrel drawdown to be reported in official EIA figures Wednesday. If API reports a smaller outflow or even a build, that might pressure prices lower.

Learn what other traders’ gold buy/sell decisions say about the price trend!

GOLD TECHNICAL ANALYSIS

The appearance of a bearish Dark Cloud Cover candlestick pattern hints gold prices may be topping. A daily close below initial support at 1282.27 opens the door for a test of the1257.60-66.44 area (former resistance, rising trend line). Alternatively, a push above the 1302.97-07.32 zone exposes a minor barrier at 1323.60, followed by a critical ceiling in the 1357.50-66.06 region.

Gold Price Chart Hints at Top Before FOMC Minutes, Powell Speech

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices continue to test support-turned-resistance at 49.41, the November 29 low. A daily close above it initially paves the way for a challenge of the 54.51-55.24 area. Alternatively, a turn lower that takes prices below the 42.05-55 zone sets the stage for a test of the August 2016 bottom at 39.19.

Gold Price Chart Hints at Top Before FOMC Minutes, Powell Speech

COMMODITY TRADING RESOURCES

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

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