Gold Price Volatility May Return on Trump Cabinet News

Talking Points:

• Gold prices treading water after falling to six-month low
• News on Trump cabinet makeup represents volatility risk
• Crude oil prices rise on OPEC output cut deal optimism

Gold prices are treading water having dropped to the lowest level in nearly six months. Bets on a steeper Fed rate hike path after the US presidential election have undermined demand for anti-fiat and non-interest-bearing assets. A lull in top-tier news-flow may allow for a corrective retracement in the week ahead but prices will probably remain highly sensitive to headline risk as the Trump cabinet takes shape.

Crude oil prices jumped higher at the open of the trading week. The move seems to reflect encouraging comments about the fate of an output reduction deal introduced in September. Implementation details are meant to be unveiled at OPEC’s formal meeting on November 30 but cartel members have struggled to find common ground on production cut quotas.

Iranian Oil Minister Bijan Namdar Zanganeh said it is “highly probable” that OPEC countries will reach consensus, according to comments made to the government’s Shana news service. Separately, Russian President Vladimir Putin said there are no major obstacles left to agreement. OPEC has sought participation from top non-member producers including Russia to boost the scheme’s chances of success.

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GOLD TECHNICAL ANALYSIS – Gold prices fell for a third consecutive day but failed to secure a break below the $1200/oz figure. From here, a daily close below the May 30 low at 1199.55 targets the 123.6% Fibonacci expansion at 1171.83. Alternatively, a reversal back above the 76.4% level at 1234.97 exposes the 61.8% Fib at 1254.50.

CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices are attempting to rebuild upward momentum with a push to test the $47/bbl figure. A daily close above the 50%Fibonacci retracementat 47.05 exposes the 47.65-48.19 area (trend line support-turned-resistance, 61.8% level). Alternatively, a reversal back below the 38.2% Fib at 45.90 paves the way for a retest of triple bottom support at 43.02.

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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