Crude Oil, Gold Price Moves Mean Little Ahead of "Brexit" Outcome
- Gold prices drop most in a month, boosting case for double top
- Crude oil prices take aim at June high after third straight gain
- “Brexit” fear to limit impact of Yellen speech, inventories data
Crude oil prices managed to secure a third consecutive day of gains. The WTI contract was under pressure for most of the trading day but managed to find support as risk appetite firmed in New York trade, rising alongside stock prices. While shares failed to sustain gains into the closing bell on Wall Street, oil prices remained buoyant after weekly inventory numbers from API revealed a drop of 5.2 million barrels.
Gold prices swooned against a backdrop of cautiously hawkish comments from Fed Chair Janet Yellen as she testified in the US Senate. Front-end bond yields rose and the US Dollar traded higher as the central bank chief continued to make the case for cautious interest rate hikes despite recently disappointing economic data.
Looking ahead, another round of Yellen testimony is on tap, this time in the House of Representatives. While the prepared remarks will remain largely unchanged, the Q&A portion of the outing may offer a bit of additional insight. The official set of weekly crude oil inventory numbers from the EIA is also due to cross the wires.
On balance, none of this is likely to inspire meaningful follow-through in the near term however. The markets are singularly focused on the UK “Brexit” referendum, with the outcome likely to reach far beyond GBP-denominated assets and translate into dramatic volatility across financial markets. With that in mind, traders are unlikely to offer directional commitment one way or another until the dust settles in the days after tomorrow’s fateful vote.
How did gold and crude oil trends stack up to DailyFX forecasts in 2Q? Find out here!
GOLD TECHNICAL ANALYSIS – Gold prices declined as expected, issuing the largest daily drop in a month and bolstering the case for a double top below $1300/0z. A daily close beneath the 23.6%Fibonacci expansion at 1260.29 exposes the 14.6% level at 1237.13. Alternatively, a reversal above the 1297.87-1303.62 area (38.2% Fib, May 2) paves the way for a challenge of the 50% expansion at 1328.25.
CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices rose of a third consecutive day, with June’s swing high above the $51/bbl figure now seemingly in the crosshairs. A daily close above the 23.6% Fibonacci expansion at 51.86 exposes the 38.2% level at 55.60. Alternatively, a move back below the 14.6% expansion at 49.56 sees the next major downside threshold at 45.60, the 23.6% Fib retracement.
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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