CRUDE OIL & GOLD TALKING POINTS:

Crude oil prices swung lower, seemingly unimpressed by EIA inventory flow data showing stockpiles shed a hefty 10.8 million barrels last week. While that topped the 4.4-million-barrel drawdown economists projected, analogous API figures foreshadowed a very similar outcome. That seems to have stripped the headline reading of meaningful market-moving potential.

Meanwhile, refined product data hinted at backup down along the supply chain. Gasoline storage lost a mere 226k barrels compared 1.4 million expected and a rise in distillate stocks proved to be nearly two times larger than the baseline forecast. News that Saudi Arabia and Kuwait plan to resume production in the neutral zone between them for the first time in four years likely added to selling pressure.

Gold prices corrected gently higher, retracing the prior session’s losses but stopping short of making any further upside progress. The bounce came against the backdrop of parallel downswings in Treasury bond yields and the US Dollar, which tends to burnish the appeal of non-interest-bearing and anti-fiat alternatives epitomized by the yellow metal.

Crude Oil Prices May Fall as Gloomy ECB, US Data Spook Markets

Looking ahead, an ECB monetary policy announcement is widely expected to strike a dovish tone as the central bank ponders slowing global growth. Indeed, priced-in rate cut expectations implied in OIS rates have been creeping higher since mid-June, with markets now all but certain that at least one rate cut is in the cards before the end of the year.

The downbeat rhetoric may unnerve the markets, cooling risk appetite. Soft US durable goods orders figures might compound the sour mood if June’s report echoes the recent trend toward underperformance on economic data flow from the world’s largest economy. Cycle-sensitive crude oil prices may suffer further in this case. Gold may flirt with the upside as yields fall but anti-risk US Dollar buying might cap gains.

Get the latest crude oil and gold forecasts to see what will drive prices in the third quarter!

GOLD TECHNICAL ANALYSIS

Gold prices are trying to make good on topping cues marked by a Bearish Engulfing candlestick pattern coupled with negative RSI divergence. A daily close below trend line support (now at 1409.54) is probably needed for confirmation. That would expose the July 1 low at 1381.91 next.Alternatively, a push above the 38.2% Fibonacci expansion at 1447.89 eyes the 50% level at 1468.27 thereafter.

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices remain mired in congestion mode above support at 54.84. A break lower confirmed on a daily closing basis exposes the 49.41-50.60 area next. Alternatively, a push above resistance at 58.19 sets the stage for a retest of the 60.04-84 zone.

COMMODITY TRADING RESOURCES

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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