CRUDE OIL & GOLD TALKING POINTS:

• Crude oil, gold prices sink as sentiment sours across global markets
• Covid cases upswell, US fiscal deadlock and election worries in play
• Q3 US GDP data may disappoint, encouraging continued liquidation

Crude oil prices sank alongside stocks as risk appetite soured across global financial markets (BNO). The WTI benchmark suffered its biggest one-day drop in almost two months. The S&P 500 stock index – a bellwether for the broader market mood – suffered the largest setback since June.

A global upswell in Covid-19 cases has tarnished hopes for a lasting economic pickup even as political deadlock in the US has derailed scope for a near-term fiscal fillip. Narrowing polls ahead of next week’s US presidential election have raised the level of uncertainty around the outcome, worrying markets further.

Gold prices likewise fell as the dour mood drove liquidation, boosting the US Dollar and undermining the appeal of anti-fiat alternatives epitomized by the yellow metal. The global reserve currency’s unrivaled liquidity dulls volatility, making it a frequent beneficiary in times of turmoil.

CRUDE OIL, GOLD MAY FALL FURTHER IF US GDP DATA DISAPPOINTS

Looking ahead, a first look at third-quarter US GDP data is in focus. An annualized rise of 32 percent – the largest on record – is expected. Critically, this would still put the annual rate of contraction from the pre-Covid peak of more than 7 percent. That is just shy of the drop seen at the 2008 trough of the Great Recession.

US economic news-flow has increasingly deteriorated relative to baseline forecasts since mid-July, warning that a disappointment might be in the works. Such an outcome might make for another risk-off push, pulling crude oil and gold prices lower still.

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices are back at range support in the 34.64-36.15 area. A daily close below that seems to expose the 27.40-30.73 region next. Resistance is in the 42.40-43.88 zone, with a push back above that putting the $50/bbl figure back in buyers’ crosshairs.

Crude oil price chart created using TradingView

GOLD TECHNICAL ANALYSIS

Gold prices slid back to support in the 1848.66-63.27 area. Breaking below this barrier on a daily closing basis may set the stage for a fall back below the $1800/oz figure. Neutralizing selling pressure calls for reclaiming a foothold above resistance in the 1911.44-28.82 zone. That may put the $2000/oz mark back in play (GLD).

Gold price chart created using TradingView