GOLD & CRUDE OIL TALKING POINTS:
- Gold prices stalling before Fed rate decision, Treasury funding news
- Crude oil prices rise on UK supply disruption, US auto rules proposal
- EIA production report, API inventory flow statistics due for release
Gold prices continued to struggle for lasting direction Monday, with traders understandably unwilling to commit one way or another ahead of the upcoming Fed rate decision. A hike is not expected but officials might dial up hawkish rhetoric in the policy statement to assert their independence after US President Donald Trump talked down rate hikes recently.
The fading appeal non-interest-bearing assets is likely to hurt the yellow metal in this case. The fall may be amplified as the US Treasury reveals how it plans to fund a deficit made larger by a $1.5 trillion tax cut and $300 billion in new spending. Officials said today that third-quarter borrowing will be $329 billion, up from April’s $273 billion projection. Added issuance may amplify upward pressure on yields.
CRUDE OIL EYES EIA OUTPUT REPORT, API INVENTORY DATA
Crude oil prices moved higher as three UK oil fields shut down ahead of strikes. Meanwhile, a joint draft report from the National Highway Traffic Safety Administration and the Environmental Protection Agency said a Trump administration proposal to halt higher auto efficiency requirements after 2020 will boost US fuel consumption by 500k barrels per day.
From here, the spotlight turns to monthly EIA production statistics as well as the API estimate of weekly inventory flows. The former will help inform bets on the extent to which growing US output can offset demand pressures. The latter will be judged with reference to official figures due Wednesday that are projected to report a 2.26 million barrel outflow.
GOLD TECHNICAL ANALYSIS
Gold prices remain locked in a familiar range above the 38.2% Fibonacci expansionat 1217.29. A daily close below this barrier initially exposes the 50% levelat 1202.28. Alternatively, a rebound above support-turned-resistance at 1236.66 opens the door for a retest of the 1260.80-66.44 area.