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CRUDE OIL & GOLD TALKING POINTS:

  • Crude oil prices drop on oversupply worries, Iran deal offer to the US
  • Gold prices surge as Fed’s Williams stokes bets on 50bps July rate cut
  • Commodities may retrace into the week-end, UofM survey data on tap

Crude oil prices continued to sink, driven lower by lingering worries about oversupply as demand softens alongside global growth while US output continues to hover near record levels. Reports saying that Iranian Foreign Minister Javad Zarif offered the US a deal to whereby Tehran would permanently accept enhanced nuclear program in exchange for the lifting of all sanctions probably helped as well.

Gold prices shot higher as New York Fed President John Williams treated investors to another round of dovish pronouncements on the direction of monetary policy. Yields fell alongside the US Dollar. The markets now see an almost even chance that the US central bank will deliver 50bps in stimulus rather than the customary 25bps after the next meeting of the rate-setting FOMC committee on July 31.

CRUDE OIL, GOLD PRICES MAY RETRACE RECENT MOVES INTO THE WEEK-END

The University of Michigan gauge of US consumer confidence headlines a quiet data docket in the final hours of the trading week. US economic data has tended to undershoot baseline forecasts recently, warning that expectations for a modest uptick may be disappointed. It seems unlikely that this has scope to drive much more of a dovish shift in already stretched Fed stimulus bets however.

This might leave room for sentiment trends to dominate price action. Bellwether S&P 500 futures are pointing higher in late Asia Pacific trade, pointing to a risk-on tilt in the prevailing market mood. That might help engineer a corrective uptick for cycle-sensitive crude oil prices. Bond yields might retrace some recent losses as well, echoing as a pullback for gold into the weekly trading close.

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

GOLD TECHNICAL ANALYSIS

Gold prices shot higher from a choppy congestion range to challenge the 38.2% Fibonacci expansion at 1447.89. A daily close above that exposes the 50% level at 1468.27. Alternatively, a reversal back below the 23.6% Fib at 1422.67 sets the stage to retest a dense support block starting at 1381.91.

Gold price chart - daily

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices continue to test support at 54.84 having broken support guiding the up move from mid-June. Breaking below that on a daily closing basis targets the 49.41-50.60 zone next. Alternatively, a turn back above resistance at 58.19 paves the way for another challenge of the 60.04-84 region.

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