Crude oil prices are back on the defensive after struggling to capitalize on yesterday’s China-driven risk rally. The WTI benchmark is proving to be more responsive when sentiment flips to a risk-off setting: S&P 500 futures are down alongside Asia-Pacific bourses and the cyclical Australian and New Zealand Dollars.

Gold prices are struggling for direction as the US Dollar and Treasury yields continue to diverge. Haven demand has lifted the Greenback – cooling demand for anti-fiat hedges – but lower bond rates are helping to limit downside progress by boosting the relative appeal of non-interest-bearing alternatives.

Broader markets turned defensive despite another buoyant day for mainland China stocks. Beijing’s encouragement may have sustained the local speculative drive but investors elsewhere seem perturbed as Melbourne brings back COVID-19 lockdown measures and parts of the US struggle with a second virus wave.

More of the same looks likely ahead. A quiet day on the economic data front looks likely to keep sentiment trends in the spotlight. A risk-off tilt looks likely, with futures tracking US and European equity benchmarks pointing convincingly lower ahead of the cash trade open.

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices are still struggling for a direction below resistance in the 42.40-43.88 area. Negative RSI divergence underscores the loss of upside momentum but it is unclear so far whether this speaks to consolidation or reversal. A daily close below 34.78 eyes the 27.40-29.11 area thereafter. Alternatively, breaking resistance probably puts the $50/bbl figure in the spotlight.

Crude oil price chart created using TradingView

GOLD TECHNICAL ANALYSIS

Gold prices remain pinned below the 38.2% Fibonacci expansion at 1789.78. Support is marked at 1747.74, with a break below that on a daily closing basis likely to expose the 1679.81 inflection point. Alternatively, a breach of resistance looks to target the 50% Fib at 1827.82 next.

Gold price chart created using TradingView