Gold Prices Unimpressed by Fed-Speak, Waiting for Yellen Speech

2016-08-19 08:00:00

Talking Points:

Gold prices shrug off hawkish Fed-speak, hold familiar range
Crude oil prices ignore Saudi output surge as rally continues
Rig count data, Yellen speech pre-positioning in focus ahead

Gold prices continue to mark time, mirroring indecision in Fed rate hike expectations. Yesterday’s round of scheduled commentary from Fed officials took on a mildly hawkish tone. New York Fed President Bill Dudley doubled down on recent calls for tightening while the San Francisco Fed’s John Williams pushed back against dovish cues picked from an essay published earlier in the week.

In fact, Williams seemed to go out of his way to sound as hawkish as possible, saying he would prefer to hike rates “sooner rather than later” and even echoing Dudley’s concerns about the markets’ under-pricing of near-term tightening probability.

On balance, this seemed to suggest that policymakers are attempting to present a united, moderately hawkish front. Traders remained skeptical however: year-end rate hike expectations implied in Fed Funds futures hardly moved and the US Dollar traded conspicuously lower. It seems the markets will need a stronger nudge, with next week’s much-anticipated speech from Chair Yellen lining up as a pivotal inflection point.

Crude oil prices continued to push higher, with gains still seemingly inspired by continued speculation that an informal OPEC meeting next month will lead to an output freeze accord. Looking ahead, the Baker Hughes Rig Count report is in focus.

The number of operating extraction points hit a five-month high last week. It is unclear that further a further expansion in output capacity will slow momentum however. Indeed, yesterday’s surge in the WTI contract played out despite the release of JODI data showing a surge in Saudi production surged in June.

What do retail traders’ gold bets hint about the price trend? Find out here !

GOLD TECHNICAL ANALYSIS – Gold prices continue to tread water in a now-familiar trading range. Near-term resistance is in the 1367.15-77.74 area (double top, 38.2% Fib expansion), with a break above that on a daily closing basis exposing the 50% Fibonacci expansion at 1398.45. Alternatively, a push below the August 8 low at 1329.79 targets the 38.2% Fib retracementat 1308.00.

CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices advanced for a sixth consecutive day, making for the longest winning streak in 17 months. Resistance is now at 48.70, the 76.4% Fibonacci retracement, with a break above that on a daily closing basis opening the door for a test of the June 9 high at 51.64. Alternatively, a reversal back below the 61.8% level at 46.88 targets the 50% Fib at 45.41.