Talking Points:
- Crude oil prices mark time, bracing for OPEC commentary
- Gold prices snap 3-day win streak on US wage growth data
- Cautious Fed-speak may cool bets on steep rate hike cycle
Crude oil prices are marking time in familiar territory as the spotlight turns back to OPEC and the implementation of its output reduction scheme. Cartel members will gather in Abu Dhabi for a variety of conferences throughout the week. Meanwhile, the group’s Secretary General Mohammad Barkindo is embarking on a three-day trip to Kuwait, which chairs the OPEC’s committee monitoring production cuts. This makes for significant headline risk and investors may be leery of taking big directional bets in the interim.
Gold prices snapped a three-day winning streak as after the December’s US employment data showed that on- wage growth jumped to a cyclical high of 2.9 percent. This suggested that the economy is running hotter than expected even before a would-be inflation boost form fiscal policies advocated by President-elect Trump. Not surprisingly, this reenergized bets on a steeper Fed rate cycle, sending US yields upward alongside the US Dollar and undermining the appeal of anti-fiat and non-interest-bearing assets.
FOMC policy speculation remains in focus from here as the markets parse scheduled comments from Eric Rosengren and Dennis Lockhart, Presidents of the Fed’s Boston and Atlanta branches respectively. A repeat of the cautious tone on offer in minutes from December’s meeting of the rate-setting committee may pour a bit of cold water on tightening bets, offering the yellow metal a bit of a lifeline.
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GOLD TECHNICAL ANALYSIS – Gold prices paused to consolidate gains but maintained their foothold above 1166.51, the 23.6% Fibonacci retracement. From here, a daily close above resistance in the 1193.55-99.80 area (38.2% level, May 30 low) exposes the 50% Fib at 1215.40. Alternatively, a break back below 1166.51 targets the 14.6% Fib at 1149.85.
CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices continue to consolidate in familiar territory. A daily close above the 14% Fibonacci expansionat 54.03 targets the 44.19-21 area (23.6% level, January 3 high). Alternatively, a reversal back below resistance-turned-support at 51.64 opens the door for a test of the 38.2% Fib retracementat 50.25.
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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