CRUDE OIL & GOLD TALKING POINTS:
- Crude oil prices may tick higher but broadly struggling for direction
- Gold prices challenging support defining their 5-month rising trend
- Speeches from Fed Chair Powell, US President Trump now in focus
Crude oil prices continue to idle, with the WTI benchmark drifting sideways in a narrow range below the $44/bbl figure. A close correlation with broader sentiment trends seems to suggest a supportive near-term backdrop as bellwether S&P 500 index futures tick higher – flagging a risk-on tilt.
Supply disruption fears may offer a further lift as storms Marco and Laura make way toward the US Gulf Coast, threatening to disrupt oil infrastructure already hobbled by the Covid-19 outbreak. Almost 60 percent of production capacity is already offline, which may dull the storms’ market-moving capacity.
Establishing a lasting directional lead will probably have to wait for later in the week however as markets await key speeches from US President Trump at the Republican National Convention (RNC) as well as Fed Chair Jerome Powell at this year’s virtual Jackson Hole symposium.
Financial markets may be spooked if Mr Trump uses the RNC platform to escalate his administration’s combative stance on China. Fears of a deepening trade war in runup to the election and thereafter should the president win may cool the outlook for economic growth and oil demand.
Chair Powell may add to downside pressure of he again asserts that the US central bank will lean on forward guidance – signaling to financial markets that speedy tightening is not in the cards – rather than expand the stimulus toolkit. Such views have triggered a risk-off response in recent weeks, and may do so again.
Gold prices may likewise find near-term support as the risk-on backdrop weighs on the defensively-minded US Dollar and feeds demand for anti-fiat assets. Here too however, Messrs Trump and Powell are likely to take top billing, with little by way of trend development likely before they’ve spoken.
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CRUDE OIL TECHNICAL ANALYSIS
Crude oil prices remain pinned to resistance in the 42.40-43.88 area. A push above it may pave the way for a test of the $50/bbl mark. Alternatively, a move below the swing low at 38.74 may set the stage for a return to the 34.38-78 inflection zone.
Crude oil price chart created using TradingView
GOLD TECHNICAL ANALYSIS
Gold prices are menacing trend line support set from March. A daily close below it may mark a substantial reversal, initially opening the door for a test of support clustered near the $1800/oz figure. Alternatively, a bounce back above the swing high at 2015.65 may bring a challenge of the record top at 2076.58.
Gold price chart created using TradingView
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— Written by Ilya Spivak, Head APAC Strategist for DailyFX
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