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Crude Oil, Gold Prices May Fall on US Retail Sales and Sentiment Data

Crude Oil, Gold Prices May Fall on US Retail Sales and Sentiment Data

Daniel Dubrovsky, Strategist

Crude Oil, Gold, XAU/USD, US Stimulus, Retail Sales, Consumer Sentiment - Talking Points:

  • Crude oil prices trimmed losses on falling inventory, US stimulus bets
  • Gold prices may fall if US retail sales, sentiment disappoints later on
  • WTI facing mixed technical signals, XAU/USD still favoring downside
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Crude oil prices swung between losses and gains over the past 24 hours, ultimately ending lower during a volatile trading session. At one point, the commodity was down as much as 4.42% before trimming most of its weakness. Meanwhile, anti-fiat gold prices finished just cautiously higher as the yellow metal rallied during the Wall Street trading session alongside the S&P 500.

Growth-sensitive oil prices remain tied to ongoing US fiscal stimulus talks. Initially, sentiment was fading amid doubts of a deal between lawmakers. However, oil received a lift as President Donald Trump said that he was willing to go beyond the Republican-lead US$1.8 trillion package. It also did not hurt that US oil stockpiles shrunk by 3.8 million barrels last week, larger than the -2.1 million consensus.

Speaker of the House Nancy Pelosi also said that a Covid package will not have to wait until January. The need for further economic support is arguably rising. The Citi Economic Surprise Index tracking the US is near a 3-month low, showing that the level of rosy surprises in data has been fading since the Summer. This could open the door to lackluster outcomes ahead.

As the week wraps up, US retail sales and University of Michigan consumer sentiment are due during the Wall Street trading session. A disappointment could deteriorate market mood further, denting crude oil prices and the S&P 500. If this fuels demand for haven assets, such as the US Dollar, that could in-turn send gold prices to the downside. Of course, progress towards a stimulus deal could offset these jitters.

Crude Oil Technical Analysis

WTI crude oil remains in a consolidative state since prices appeared to top in the middle of August. The commodity has been ranging between support and resistance at 36.15 and 43.87 respectively. A bearish ‘Death Cross’ formed in early September as the 20-day Simple Moving Average (SMA) crossed under the 50-day SMA. However, oil also pushed through a falling trend line from January. Confirmation is however lacking.

WTI Crude Oil Daily Chart

Crude Oil, Gold Prices May Fall on US Retail Sales and Sentiment Data

Chart Created Using TradingView

Gold Technical Analysis

Gold prices have lately been struggling to add onto gains since XAU/USD found support in late September. Falling resistance from August seems to be maintaining a slight downside bias along with a bearish ‘Death Cross’. A close under short-term rising support from late September could open the door to testing the 1848 – 1863 zone for another attempt to extend losses since August.

XAU/USD Daily Chart

Crude Oil, Gold Prices May Fall on US Retail Sales and Sentiment Data

Chart Created Using TradingView

--- 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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