Gold Prices Still Vulnerable, Crude Oil Focuses on Covid Over OPEC+ Output

Gold, XAU/USD, Crude Oil, Coronavirus, OPEC, Technical Analysis - Talking Points:

• Gold prices weakened as US Dollar gained amid wobbly sentiment
• Crude oil struggled capitalizing on OPEC plan to extend output cuts
• XAU/USD ‘Death Cross’ remains in play, WTI consolidation eyed

Anti-fiat gold prices declined over the past 24 hours as the liquid US Dollar managed to recover more losses in the aftermath of the US presidential election. Investors poured capital back into tech stocks as the Nasdaq 100 soared and the Dow Jones slightly weakened. Concerns over rising coronavirus cases globally dented sentiment, depriving growth-linked crude oil prices of gains earlier in the session.

OPEC’s president alluded to the possibility of extending output cuts into next year, perhaps by 3 to 6 months. That is likely what propelled energy prices before pulling back during the Wall Street session. The United States set another daily record for coronavirus cases, increasing by 146,149. New York State ordered bars and restaurants closed at 10pm local time. Ohio is reviewing shutting down dining and gyms.

Hopes of a Covid-19 vaccine likely kept sentiment from deteriorating further. Futures tracking Wall Street are pointing lower heading into the European and North American trading sessions. Falling Treasury yields could cushion downside potential in gold however. Crude oil prices are looking vulnerable. The EIA is anticipating a 0.8m barrel drawdown in stockpiles last week, opening the door to taming weakness in oil prices ahead.

Gold Technical Analysis

Gold prices are idling above the key 1848 – 1863 support zone after prices tumbled over 5 percent at the start of the week. This is keeping the bearish ‘Death Cross’ in play after the 20-day Simple Moving Average (SMA) crossed under the 50-day one. Positive RSI divergence does show that downside momentum is fading, which can at times precede a turn higher. In such an outcome, keep an eye on the 1924 – 1933 inflection zone.

XAU/USD Daily Chart

Chart Created Using TradingView

Crude Oil Technical Analysis

WTI crude oil prices are on the cusp of the 41.61 – 43.75 resistance zone which has been in play since June, keeping the commodity in a consolidative state. In late October, oil attempted to breach key support (36.15 – 37.10) but ultimately failed to breakout. With that in mind, a hold at resistance here may open the door to another turn lower, prolonging range-bound price action.

WTI Crude Oil Daily Chart

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