Crude oil, gold price performance chart created using TradingView

GOLD & CRUDE OIL TALKING POINTS:

Gold prices mark time as all eyes turn to Jackson Hole symposium

Downturn may be in the cards as Powell cools rate cut speculation

ECB minutes, Eurozone PMI data may struggle for follow-through

The release of minutes from July’s FOMC meeting did not inspire a strong response from financial markets. While the document reiterated that the central bank sees last month’s rate cut as a “mid-cycle adjustment” – downplaying scope for follow-on easing – stimulus-hungry financial markets refused to relent.

Indeed, Fed Funds futures still imply 50-75bps in further easing before year-end. Investors’ defiant stance probably reflects lingering hope that the dated Minutes document will be superseded by promises of lavish accommodation to be unveiled at the US central bank’s symposium in Jackson Hole, Wyoming.

The gathering gets underway today, but the main event comes on Friday when Fed Chair Powell steps up to the microphone. The bar to exceed the markets’ ultra-dovish baseline outlook seems exceedingly high while the risk of disappointment appears outsized against the backdrop of still-solid economic data.

That probably bodes ill for gold. The appeal of the non-yielding metal is likely to be diminished if Mr Powell and company appear unwilling to commit to big-splash rate reduction. Cycle-geared crude oil prices look likewise vulnerable as fading faith in policy support sours market-wide risk appetite.

Directional conviction may be absent in the meanwhile. July ECB meeting minutes could cheer investors a bit if the central bank telegraphs fireworks with its own stimulus boost – a move whose likelihood might be reinforced by soft Eurozone PMI data – but Jackson Hole anticipation may contain follow-through.

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GOLD TECHNICAL ANALYSIS

Gold prices are still treading water below August’s high at 1535.03 but negative RSI divergence warns a turn lower may be ahead. A daily close below initial support at 1480.00 opens the door for a test of the 1437.70-52.95 area. Alternatively, a break of resistance targets a weekly chart inflection level at 1563.00.

Gold price chart created using TradingView

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices are still grinding against resistance set from late April, now at 58.18. A daily close above that targets the 60.04-84 zone next. Alternatively, a reversal back below the 53.95-54.84 congestion area sets the stage to challenge the $50/bbl figure once more.

Crude oil price chart created using TradingView

COMMODITY TRADING RESOURCES

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

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter