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CRUDE OIL & GOLD TALKING POINTS:

  • Crude oil prices drop to 3-week low, set sights on $50/bbl figure
  • Gold prices surge as trade war worries drive bond yields lower
  • Fed’s Evans may cool rate cut bets, cooling risk appetite further

A recovery on Wall Street after Monday’s eyewatering losses did not extend into the commodities space. Cycle-sensitive crude oil prices fell, and bond yields tracked lower amid speculation that the US-China trade war will compound pressure on already weakening global economic growth, spurring on Fed rate cuts. Gold prices were understandably buoyed by such a prospect, setting a new six-year high.

More of the same looks likely ahead. Bellwether S&P 500 futures point lower before the opening bell in New York, warning that yesterday’s bounce might have been a brief correction. Comments from Chicago Fed President Charles Evans might help cool risk appetite if he signals the FOMC is no hurry to cut rates again. His St Louis colleague James Bullard suggested as much yesterday (as expected).

EIA inventory flow figures top a barebones data docket. Traders expect to see a 2.5-million-barrel drawdown. API flagged a larger 3.4-million-barrel outflow yesterday, with anything smaller than that now seemingly unlikely to impress investors and offset any broader sentiment-driven selling pressure. An unexpectedly larger drop may help a bit, but upside follow-through seems unlikely given the dour macro backdrop.

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

GOLD TECHNICAL ANALYSIS

Gold prices continue to push upward, testing resistance marked by the 50% Fibonacci expansion at 1470.68. A daily close above that exposes the 61.8% level at 1513.94. Alternatively, a move back below the 38.2% level at 1470.68 opens the door for a retest of resistance-turned-support in the 1439.14-1452.95 area.

Gold price chart - daily

Gold price chart created using TradingView

CRUDE OIL TECHNICAL ANALYSIS

Sellers returned to the offensive after a brief consolidative pause, pushing crude oil prices to a three-week low. Immediate support is in the 49.41-50.60 area, with a daily close below that setting the stage to test the 42.05-43.00 zone. Alternatively, a move above 56.09 targetsback-to-back falling trend line and inflection zone resistance running up through 60.84.

Crude oil price chart - daily

Crude oil price chart created using TradingView

COMMODITY TRADING RESOURCES

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

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