Talking Points:
- Crude oil prices rise most in 7 months on OPEC deal optimism
- Gold prices retrace as markets digest “Trump trade” volatility
- API inventory data, Trump cabinet news in the spotlight ahead
Crude oil prices shot higher following encouraging comments about implementation of an OPEC supply cut accord unveiled in September. Cartel members have struggled to reach agreement on output cut quotas due to be unveiled at a meeting on November 30.
Iraqi Oil Minister Jabbar al-Luaibi said it will offer proposals on reaching agreement. This echoed yesterday’s supportive remarks from Iran’s Oil Minister and Russian President Vladimir Putin. While Russia is not an OPEC member, the major producer’s participation is seen as essential for the scheme’s success.
Jaw-boning can only take prices so far however, and it may be difficult for the move higher to continue without a steady stream of supportive commentary. Another large stockpiles build reported in the upcoming API weekly inventories data may undermine follow-through and force the WTI benchmark lower.
Gold prices edged higher as the so-called “Trump trade” went in reverse amid a lull in fresh fodder feeding the narrative (as expected). Traders had been betting that the President-elect’s platform will prove inflationary, boosting Fed rate hike bets and sinking the yellow metal.
Looking ahead, the corrective recovery may continue as markets to digest volatility sparked in the aftermath of the US presidential election. The liquidity drain typical ahead of the Thanksgiving holiday may encourage this dynamic, though news-flow about key Trump cabinet appoints may disrupt things.
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GOLD TECHNICAL ANALYSIS – Gold prices edged narrowly higher having hit a six-month low near the 1200/oz figure. Near-term resistance is at 1234.97, the 76.4% Fibonacci expansion, with a break above that on a daily closing basis exposing the 61.8% level at 1254.50. Alternatively, a turn below the May 30 low at 1199.55 targets the 123.6% Fib at 1171.83.
CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices continued to push higher having established a bottom as expected, posting the largest daily advance in seven months. From here, a daily close above the 50% Fibonacci expansion at 48.55 exposes the 61.8% level at 50.05. Alternatively, a reversal back below the 38.2% Fib at 47.05 targets range top resistance-turned-support at 45.92.
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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