CRUDE OIL & GOLD TALKING POINTS:
- Crude oil price charts hint a significant top may be forming
- Gold prices aim higher as bond yields drop in risk-off trade
- US retail sales, EIA drilling report, tanker tracker data due
Crude oil prices corrected cautiously higher alongside stocks while gold prices backtracked as a corrective tone prevailed in Friday’s trade, as expected. The move follows last week’s explosive risk aversion amid worries about the pace of Fed interest rate hikes. It sent the WTI benchmark down alongside stock prices while the yellow metal gained as the sour mood weighed on bond yields.
CRUDE OIL AT RISK, GOLD AIMS HIGHER IN RISK-OFF TRADE
Looking ahead, oil may struggle as market-wide sentiment sours anew. Worries about European politics appear to be the catalyst du jour after Brexit talks stalled and coalition-building efforts failed in Sweden. Gold is poised to continue higher as haven-seeking flows pressure Treasury rates again. Improving US retail sales data may undermine upside progress if it stokes Fed tightening bets however.
The monthly EIA Drilling Report is also due to cross the wires while the latest Bloomberg tanker-trackingdata may hint at the impact of the upcoming reinstatement of US sanctionson oil exports from Iran. That is due on November 4. The extent to which supply trend indications can outshine broader sentiment swings remains to be seen however.
See our crude oil forecast to learn what is likely to drive price action through year-end!
GOLD TECHNICAL ANALYSIS
Gold prices are in digestion mode after last week’s upside break. Near-term resistance remains in the 1235.24-41.64 area, with a daily close above that targeting the 1260.80-66.44 region next. Alternatively, a turn back below the former range top in the 1211.05-14.30 zone sees the next critical hurdle at 1180.86, the September 28 swing bottom.
CRUDE OIL TECHNICAL ANALYSIS
Crude oil prices paused ahead of support in the 70.05-26 area (former resistance, trend line) having dropped following the formation of a Bearish Engulfing candlestick pattern. A daily close below support paves the way for a test of rising trend support set from February, now in the 66.47-68.35 zone. Alternatively, a reversal back above 78.22 exposes anew the 75.00-77.31 resistance region (August 2011 – June 2012 lows).
Weekly chart positioning warns of longer-term reversal. A pair of bearish Evening Star candlestick patterns coupled with negative RSI divergence suggest a double top may be in place. Confirmation is pending on a break through the lower boundary of 16-month trend support, now at 67.90.
COMMODITY TRADING RESOURCES
- Learn what other traders’ gold buy/sell decisions say about the price trend
- Having trouble with your strategy? Here’s the #1 mistake that traders make
- Join a Trading Q&A webinar to answer your commodity market questions