GOLD & CRUDE OIL TALKING POINTS:
- Gold prices might struggle to extend higher before FOMC minutes
- Crude oil prices locked in place amid conflicting supply trend cues
- API inventory flow data due, SF Fed President Mary Daly to speak
Gold prices rose as expected, with another risk-off day on Wall Street pushing the US Dollar lower alongside a flattening of the 2019 rate hike path implied in Fed Funds futures. That bolstered the appeal of anti-fiat alternatives epitomized by the yellow metal.
The Greenback is usually a beneficiary of haven-seeking capital flows but the latest round of risk aversion has proven damaging. This seems to reflect hopes for a so-called “Powell put”. Put simply, this envisions a scenario wherein market turmoil will push the US central bank to moderate tightening plans.
From here, comments from San Francisco Fed President Mary Daly – the newest voter on the rate-setting committee – may help inform policy speculation and thereby drive gold price action. Follow-through may be limited as traders await the release of minutes from September’s FOMC meeting, due Wednesday.
CRUDE OIL STUCK AMID CONFLICTING CUES, API DATA ON TAP
Meanwhile, crude oil prices marked time amid conflicting catalysts. Bloomberg tanker tracker data showed shipments from Iran continued to fall in the first half of October ahead of the re-imposition of US sanctions but EIA drilling productivity data predicted pickup in US output in November.
Looking ahead, the weekly inventory flow data form API is in focus. The outcome will be judged against forecasts calling for a 165.3k barrel drawdown to be reported in official DOE figures on Wednesday. Prices may fall if API calls for a smaller draw or a surprise build, whereas a larger outflow may boost them.
See our gold forecast to learn what is likely to drive price action through year-end!
GOLD TECHNICAL ANALYSIS
Gold prices are showing negative RSI divergence below resistance in the 1235.24-41.64 area, hinting at a pullback ahead. A turn below resistance-turned-supportin the 1211.05-14.30 zone exposes the September 28 low at 1180.86. Alternatively, a push above 1241.64 targets the 1260.80-66.44 region next.
CRUDE OIL TECHNICAL ANALYSIS
Crude oil prices are digesting losses above support in the 70.05-26 area (former resistance, trend line). A break below that exposes rising trend support set from February, now in the 66.48-68.38 zone. Alternatively, a rebound back above 78.22 paves the way for a retest of the 75.00-77.31 resistance region (August 2011 – June 2012 lows). Longer-term positioning hints a major top may be taking shape.
COMMODITY TRADING RESOURCES
- See our guide to learn about the long-term forces driving crude oil prices
- 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