Looking ahead, US fiscal stimulus negotiations may be in focus as officials scramble to get a deal done before Congress departs for a recess at the end of the week. Democrats have put up a proposal costing $3.5 trillion while Republicans countered with a $1 trillion scheme.
A deal seems likely as policymakers look ahead to November’s election, so its size will probably be most meaningful from a market-moving perspective. Anything shy of $2 trillion may be met with disappointment, boosting haven demand for the US Dollar and broadly hurting commodity prices.
Read More : Gold Accelerates Higher on Fragile Economic Recovery Hopes – GSR
GOLD TECHNICAL ANALYSIS
Gold prices are trading in uncharted territory having extended to a record high above the $2000/oz figure. Fibonacci expansion levels offer a crude guesstimate of oncoming upside barriers.
A break above the 123.6% mark at 2059.74 may clear the way for a test of the 138.2% Fib at 2105.57. Negative RSI divergence warns of ebbing upside momentum however, which may be followed by a downturn. A drop below the 100% expansionat 1985.67 may then expose the 1918.49-20.94 area (78.6% Fib, 2011 swing top).
CRUDE OIL TECHNICAL ANALYSIS
Crude oil prices pointedly recoiled from resistance in the 42.40-43.88 area, producing an imposing Shooting Star candlestick. Coupled with negative RSI divergence, the setup hints at exhaustion that might set the stage for bearish reversal.
A daily close below swing low support at 38.74 looks likely to target the 34.38-78 zone next. Alternatively, a breach of resistance may put the $50/bbl figure in the cross-hairs.
