Gold Prices Drop to 4-Month Low as US Jobs Data Looms Ahead

DailyFX.com -

Talking Points:

• Gold prices drop to four-month low on Fed rate hike bets
• Crude oil prices continue to march toward June swing high
• US payrolls figures may put commodities under pressure

Gold prices continued to sink, hitting a four-month low as a firming Fed monetary policy outlook drove US bond yields higher and undermined demand for anti-fiat and non-interest-bearing assets. Meanwhile, crude oil prices advanced following reports that officials from Russia will meet with their OPEC counterparts in Istanbul next week to discuss participation in the cartel's supply control deal announced in Algiers last week. Expected supply disruptions linked to Hurricane Matthew may have also proved supportive.

Looking ahead, September's US Employment report is in focus. The headline nonfarm payrolls increase needs to overcome a relatively shallow hurdle to reinforce bets on a Fed rate hike, an outcome that seems likely to boost the US Dollar and compound pressure on gold prices. Crude oil may likewise suffer as a stronger greenback puts de-facto selling pressure on the USD-denominated WTI benchmark. Prices are already on the defensive after Russian Energy Minister Alexander Novak said he doesn't expect the Istanbul sit-down produce an accord.

Track short-term crude oil and gold price patterns with the GSI indicator !

GOLD TECHNICAL ANALYSIS - Gold prices dropped for the eighth consecutive day, marking the longest losing streak in four months. Near-term support is now at 1240.96, the 76.4% Fibonacci retracement, with a break below that exposing the May 31 low at 1190.55. Alternatively, a reversal above the 61.8% level at 1266.58 targets the 50% Fib at 1287.29.

CRUDE OIL TECHNICAL ANALYSIS - Crude oil prices continue their march toward May's swing top at 54.61. A daily close above this barrier exposes the 100% Fibonacci expansion at 52.51. Alternatively, a reversal back below the 76.4% level at 50.20 targets the 48.77-97 area (August 22 high, 61.8% Fib).

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

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.