Talking Points:

• Crude oil prices drop before a much-anticipated OPEC meeting
• Gold prices stalling having failed to build on post-FOMC gains
• Fed-speak bodes ill for gold, crude oil volatility set to continue

Crude oil prices plunged after news-wires reported that Saudi Arabia is not expecting a clear-cut decision on supply management to emerge out of this week’s much-anticipated informal OPEC meeting in Algiers on the sidelines of the International Energy Forum (IEF). Markets have speculated that the gathering may produce an accord to freeze or reduce output levels.

News-flow has been far from consistent however, with Algerian Energy Minister Noureddine Boutarfa claiming that the Saudi delegation offered to cut production to January levels if Iran reciprocated by capping output at the current setting. Separately, reports suggesting Russia will only join the sit-down if OPEC members arrive at an agreement amongst themselves.

Kneejerk volatility will probably continue through the middle of the week as IEF-related headlines stream over the wires. On balance, an output deal seems unlikely with Saudi Arabia and Iran unwilling to commit to anything that might help one another while the two countries are engaged on opposite sides of at least two proxy wars (in Syria and Yemen). This suggests the path of least resistance favors crude oil weakness.

Gold prices continue to mark time having struggled to find follow-through after last week’s FOMC-inspired rally (as expected). Selling pressure may re-emerge this week as a steady stream of commentary from Fed officials bolsters reinforces a hawkish posture from Chair Yellen, who all but promised tightening in December. Remarks from the central bank chief herself as well as eight regional branch Presidents, two Governors and Vice Chair Fischer are on the docket.

GOLD TECHNICAL ANALYSIS – Gold prices continue to tread water below resistance at a falling trend line capping the upside since early July (now at 1345.78). A break above this barrier on a daily closing basis targets a double top at 1367.15. Alternatively, a move back below the 23.6% Fibonacci retracement at 1333.62 exposes familiar support in the 1303.62-08.00 area (May 2 high, 38.2% level).

CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices recoiled from trend line resistance containing prices over the past month. A daily close below the 38.2% Fibonacci expansion at 44.20 exposes the 42.73-43.02 area (50% level, September 1 low). Alternatively, a reversal above the 46.02-39 zone (23.6% Fib, trend line) targets the September 8 high at 47.72.