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Gold and Crude Oil Price Outlook Vulnerable to US-China Trade News

Gold and Crude Oil Price Outlook Vulnerable to US-China Trade News

Daniel Dubrovsky, Strategist

Gold & Crude Oil - Talking Points

  • Gold and crude oil prices swing on latest volatile US-China trade news
  • Sentiment-linked oil and anti-fiat gold eye ongoing updates and US CPI
  • XAU/USD near-term downtrend may hold as crude oil pressures support

Find out what retail traders’ gold buy and sell decisions say about the coming price trend!

Commodities Wrap - Thursday APAC Session

Volatility in financial markets during Thursday’s Asia Pacific trading session overshadowed developments during Wednesday’s US session, and this impacted both gold and crude oil prices. Initially, sentiment-linked crude oil declined after reports crossed the wires of a lack in deputy-level trade talks between the United States and China. WTI tumbled as S&P 500 futures declined as much as one percent.

As fears started rising about an escalation in the US-China trade war, Federal Reserve easing bets boosted anti-fiat gold prices at the expense of the US Dollar. Sentiment soon recovered however as reports crossed the wires that the US is considering a currency pact with China, lifting the Yuan alongside risk-sensitive crude oil prices. The yellow precious metal also gave up gains as the mood in markets improved.

Trade Headlines, US CPI Data Eyed

The importance of US-China trade talks for sentiment was underpinned lately given the adverse impact that an escalation in tariffs can have on global growth. As such, until the outcome in negotiations between the US and China is known around the end of the week, stray headlines relating to this topic will continue driving volatility. Results closer towards an agreement may boost crude oil while sink gold prices and vice versa.

Over the next 24 hours, the markets will also be eyeing the upcoming US inflation report. Headline CPI is expected to clock in at 1.8 percent y/y in September from 1.7 prior. Lately, local economic news flow has been tending to disappoint relative to expectations. If that continues to drive concerns of a US slowdown, increasing Fed rate cut bets, then anti-fiat gold prices may rally.

Gold Technical Analysis

Descending resistance from September is keeping the near-term downtrend in gold intact – blue line on the chart below. A close above it may pave the way for a test of resistance at 1535 before aiming for August highs. Otherwise, resuming losses places the focus on the psychological barrier between 1480 to 1485.

XAU/USD Daily Chart

Gold and Crude Oil Price Outlook Vulnerable to US-China Trade News

Chart Created Using TradingView

Crude Oil Technical Analysis

Meanwhile, crude oil prices are still struggling to push into the outer boundary of critical support which is an area between 50.41 and 52.08. This also follows the push above near-term descending resistance from the middle of September. However, upside follow-through has been lacking. A climb places the focus on 54.55.

Crude Oil Daily Chart

Gold and Crude Oil Price Outlook Vulnerable to US-China Trade News

Chart Created Using TradingView

Commodity Trading Resources:

--- Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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