Gold Prices May Find Near-Term Support But Lasting Gains Unlikely

GOLD & CRUDE OIL TALKING POINTS:

• Gold prices fell as firming Fed rate hike bets lifted yields, US Dollar
• Risk aversion may cap near-term gold drop, lasting rebound unlikely
• Crude oil prices eyeing OPEC+ call, EIA drilling productivity data

Gold prices fell as the US Dollar rose alongside front-end Treasury bond yields and the priced-in rate hike path implied in Fed funds futures steepened (as expected), undermining the appeal of anti-fiat and non-interest-bearing assets. Crude oil prices oscillated in a volatile range but ultimately settled little-changed.

GOLD MAY RISE AS SENTIMENT SOURS, OIL EYES SUPPLY TRENDS

Looking ahead, risk aversion may offer gold a lifeline as haven demand weighs on yields. Shares mostly fell in Asia Pacific trade and index futures tracking the FTSE 100 and S&P 500 benchmarks are trading lower before London and New York come online, hinting at more of the same ahead.

Upside momentum may be limited however if the haven demand buoys the greenback. In fact, pre-positioning for next week’s FOMC rate decision may see the US unit well-supported in any case as the perceived likelihood of a December rate increase grows, setting the stage for a hawkish turn in guidance.

Meanwhile, supply considerations may be front and center for oil prices. The OPEC+ Joint Technical Committee will hold a private conference call to discuss output strategy, with markets eyeing any follow-on commentary. The EIA Drilling Productivity report is also due to cross the wires.

GOLD TECHNICAL ANALYSIS

Gold prices continue to consolidate below the August 28 high at 1214.30. A daily close above this barrier exposes support-turned-resistance in the 1235.24-41.64 area as the next upside barrier. Alternatively, a drop below the August 24 lowat 1183.28 targets the swing bottom at 1160.37.

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices are in digestion mode after retreating from resistance in the 70.15-41 area. A daily close below rising trend support in the 65.54-67.39 zone opens the door for a challenge of the 64.26-45 region. Alternatively, a posh above resistance sees the next upside threshold at 72.88.

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