Gold prices stalled after posting the largest gain in two weeks and my turn lower as Fed commentary stokes December rate hike speculation.
Gold prices struggled to find follow-through after posting the largest daily gain in two weeks following the FOMC rate decision (as expected). Initial elation at the flattening of the central bank’s projected rate hike path in the immediate aftermath of the policy announcement may be giving way to the realization that Chair Yellen seemed to all but promise a rate hike in December.
Crude oil prices rose as hopes for a coordinated output freeze to be agreed this month resurfaced. Representatives from Saudi Arabia and Iran met for a second day at OPEC headquarters in Vienna ahead of the cartel’s informal gathering in Algiers next week. Securing agreement between the rivals – currently on opposite sides of two wars (in Syria and Yemen) – is a prerequisite to any serious discussion of an accord.
Fed-speak re-enters the spotlight from here. Commentary from Patrick Harker, Loretta Mester and Dennis Lockhart – Presidents of the US central bank’s Philadelphia, Cleveland and Atlanta branches respectively – is set to cross the wires. Rhetoric reinforcing Chair Yellen’s hawkish posture may weigh on gold prices and boost the US Dollar, applying de-facto selling pressure to the USD-denominated WTI crude oil benchmark.
GOLD TECHNICAL ANALYSIS – Gold prices stalled below resistance at a falling trend line set from early July after rising to a two-week high. A daily close above this threshold – now at 1346.51 – exposes a double top at 1367.15. Alternatively, a reversal back below the 23.6% Fibonacci retracement at 1333.62 targets the 1303.62-08.00 area (May 2 high, 38.2% level).
CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices extended their recovery for a third consecutive day, making for the longest winning streak in a month. From here, a daily close above the 38.2% Fibonacci expansionat 46.46 targets the 47.06-61 area (trend line, 50% level). Alternatively, a move back below the 23.6% Fib at 45.03 exposes the 14.6% expansion at 44.15.
Courtesy: Ilya Spivak
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