Talking Points:

Gold prices finished last week on the defensive as hawkish comments from Fed Chair Janet Yellen fueled rate hike speculation, boosting the US Dollar and undermining demand for anti-fiat assets (as expected).Crude oil prices followed suit, with a surging greenback putting de-facto selling pressure on the USD-denominated WTI contract. Yellen said “the case for an increase in the federal funds rate has strengthened in recent months”.

Looking ahead, Fed policy speculation remains in focus as the central bank’s favored PCE inflation data is released. The core year-on-year rate is expected to tick lower, registering at 1.5 percent in July compared with 1.6 percent in the prior month. This may dampen rate hike bets a bit and offer a bit of a boost to commodity prices, but follow-through may be limited considering the slowdown was telegraphed in CPI data released two weeks ago.

GOLD TECHNICAL ANALYSIS – Gold prices continue to edge lower after last week’s range breakout. From here, a daily close below the 1303.62-08.00 area (May 2 high, 38.2% Fibonacci retracement) exposes the 50% level at 1287.29. Alternatively, a move back above support-turned-resistance in the 1329.79-33.62 zone (August 8 low, 23.6% Fib) targets a falling trend line at 1351.64.

CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices are digesting losses after an initial move lower following the appearance of a bearish Evening Star candlestick pattern. Near-term support is at 46.65, the 23.6% Fibonacci retracement, with a break below that exposing the 38.2% level at 45.22. Alternatively, a daily close above the 14.6% Fib at 47.54 paves the way for a retest of the August 22 high at 48.97.