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GOLD & CRUDE OIL TALKING POINTS:

  • Gold prices struggle for momentum despite dovish Fed guidance
  • Soft US retail sales data may boost haven-seeking USD demand
  • Crude oil prices eyeing API data after largest drop in two weeks

Gold prices are struggling to gain traction despite what seems like a compelling catalyst: unmistakably dovish guidance form the Federal Reserve. That suggests the markets may have already priced in as much policy easing as can be reasonably expected before year-end.

This makes for a curious backdrop as the spotlight turns to June’s US retail sales report. A slowdown is expected to yield the weakest growth in four months at 0.2 percent. US data flow has tended to undershoot forecasts in recent months, warning that a still-weaker result may be in the cards.

If the markets have exhausted their capacity to be cheered by hopes for easier Fed policy, a soft result may register as risk aversion. That might bring on a gold-supportive slide in bond yields, but this might be countered (if not overwhelmed) by haven-seeking capital flows buoying the US Dollar.

Another downbeat outing from Fed Chair Jerome Powell might compound this dynamic. He is scheduled to speak at the Bank of France and seems likely to revisit some of the US central bank’s most prominent pain points, with particular emphasis on trade wars and the global slowdown they’ve helped engineer.

CRUDE OIL PRICES EYE API DATA AFTER LARGEST DROP IN 2 WEEKS

Crude oil prices posted the largest daily drop in two weeks. Selling pressure began to emerge late last week with the downgrade of tropical storm Barry to a “depression” and an ominous IEA report warning of oversupply despite OPEC-driven efforts at destocking.

Yesterday, reports that US energy infrastructure shuttered ahead of Barry would soon return online reinforced the former narrative. Meanwhile, EIA drilling productivity data forecasting a pickup in new-well and overall output in August seemed to bolster the latter.

The spotlight now turns to API inventory flow statistics. They will be weighed up against expectations calling for a 3.7-million-barrel outflow projected to be reported in official EIA figures Wednesday. A smaller draw or a surprise build might weigh on prices, while a larger one might furnish fuel for a bounce.

Get the latest gold and crude oil forecasts to see what will drive prices in the third quarter!

GOLD TECHNICAL ANALYSIS

Gold prices remain locked in a choppy range below a resistance region centered around the August 2013 high at 1433.85. Breaking upward looks like it may set the stage for a test above the $1500/oz figure. On the downside, any would-be reversal needs to overcome a dense block extending out through 1346.75.

Gold price chart - daily

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices pulled back from resistance in the 60.04-84 area but left the outlines of a last week’s would-be upside breakout intact for now. Trend line resistance-turned-support reinforces back-to-back downside barriers running down through 54.84, with a break below that probably needed to call a reversal.

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