Gold, XAU/USD, Crude Oil, WTI, Recession Woes, Fed – Commodities Briefing:

  • Crude oil and gold costs fell sharply on Thursday as volatility struck
  • Supportive US financial knowledge bolstered the case for a hawkish Fed
  • Traders eyeing University of Michigan sentiment earlier than the weekend

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Crude oil and gold costs wobbled on Thursday as market volatility struck as soon as once more. Better-than-expected US financial knowledge was seemingly the important thing perpetrator. Weekly preliminary jobless claims (213K) and retail gross sales (0.3% m/m) beat forecasts at 227k and -0.1%, respectively. Front-end Treasury yields climbed to a new excessive for this yr, signaling firming hawkish Federal Reserve expectations.

When volatility strikes, correlations have a tendency to strengthen throughout markets. Anti-fiat gold costs are weak to a stronger US Dollar and rising authorities bond yields. Since each the latter moved in the identical course, which was up, this proved to be an excessive amount of for gold. XAU/USD slid 1.89%, touching a new low for this yr as effectively as the most affordable value since April 2020.

As for sentiment-linked crude oil, rising fears of a international development slowdown didn’t assist the commodity. The Atlanta Fed GDPNow estimate for the third quarter slid to 0.5%, down from 1.3% a week in the past. Looking on the intently watched 10-year 2-year Treasury yield curve, it slid deeper into adverse territory. The latter is nearing August’s low of -0.5%, indicating rising issues about development.

The financial docket notably dies down heading into the weekend. Sentiment throughout the Asia-Pacific buying and selling session remained pessimistic, leaving gold and crude oil costs in danger. Preliminary US University of Michigan sentiment will cross the wires at 14:00 GMT. An upward tick to 60 in September from 58.2 is seen. A greater end result dangers additional pressuring gold and crude oil.

Crude Oil Technical Analysis

WTI crude oil costs slid 4.33% on Thursday, probably the most in over a week. Prices turned proper on the 20-day SMA as it reinstated the draw back focus. Immediate help seems to be the October 2021 excessive at 85.387. Further losses would expose the September eighth low at 81.207.

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WTI Daily Chart

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Gold Technical Analysis

Gold has damaged underneath the 1681 – 1696 help zone, taking out the 2021 low as effectively. That has uncovered the 78.6% Fibonacci extension at 1651 earlier than the 100% stage kicks in at 1609. In the occasion of a flip increased, preserve a shut eye on the 20-day Simple Moving Average. It may preserve the draw back focus.

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XAU/USD Daily Chart

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— Written by Daniel Dubrovsky, Strategist for DailyFX.com

To contact Daniel, use the feedback part under or@ddubrovskyFXon Twitter

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