Gold Prices May Turn Lower Anew After US CPI Data

GOLD & CRUDE OIL TALKING POINTS:

• Gold prices rise to near-term range top as the US Dollar retreats
• Crude oil prices spike on EIA data but follow-through evaporates
• Augusts’ US CPI figures, IEA monthly report now in the spotlight

Gold prices rose as the US Dollar fell, boosting the relative appeal of anti-fiat assets epitomized by the yellow metal. Crude oil prices spiked to a one-week high intraday as EIA inventory data showed a larger than expected drawdown of nearly 5.3 million barrels. 

US CPI DATA, IEA MONTHLY REPORT IN FOCUS

From here, the spotlight turns to US CPI data. The headline on-year inflation rate is expected to tick down to 2.8 percent in August after hitting a six-year high of 2.9 percent in July. An upside surprise echoing last month’s surge in wage growth may drive a hawkish shift in Fed interest rate hike expectations, reviving the greenback’s fortunes and weighing on gold prices by extension.

Meanwhile, oil traders will look to a monthly report from the IEA to inform supply and demand projections. An analogous release from OPEC yesterday sounded a worried tone, identifying a range of “challenges” –trade wars, monetary tightening and emerging markets jitters – that might hurt demand. A similarly cautious stance in today’s release may weigh on prices.

GOLD TECHNICAL ANALYSIS

Gold prices are in digestion mode after breaking counter-trend support, implying downtrend resumption is in the works. From here, a daily close below theAugust 24 lowat 1183.28 initially exposes the swing bottom at 1160.37. Alternatively, a turn back above 1214.30, the August 28 high, opens the door for a retest of support-turned-resistance in the 1235.24-41.64 area.

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices continue to test resistance in the 70.15-41 area, with a break above that confirmed on a daily closing basis exposing the chart inflection point at 72.88. Rising trend support guiding the move higher since early February is now in the 65.41-67.26 zone.

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