Talking Points:
- Gold prices set new 6-week high after Trump press conference
- Crude oil prices find de-facto strength as the US Dollar drops
- Even hawkish Fed-speak may fail to break overnight dynamics
Gold prices continued to rise and crude oilprices followed as a press conference with Donald Trump poured cold water on Fed rate hike speculation. The US President-elect did not offer much to markets yearning for details about his on-coming economic policy plans, which have been speculated to boost inflation and force Janet Yellen and company in to a steeper tightening cycle.
Treasury bond yields fell alongside the US Dollar, boosting the appeal of anti-fiat and non-interest-bearing assets including gold. The weaker greenback also offered a lift to the benchmark WTI contract because it is priced in terms of the US currency, even as EIA inventories data showed a much larger build (4.1m barrels) than economists projected (930.1k).
Fed-speak comes back into the spotlight from here after as the lull in high-profile economic data continues. This time around, comments from incoming FOMC voters Patrick Harker and Charles Evans – Presidents of the US central bank’s Philadelphia and Chicago branches – are going to be in focus. Even a broadly hawkish tone may fall on deaf ears however, as we saw earlier in the week.
On balance, this may mean that dynamics established overnight will find follow-through amid continued retracement of “Trump trade” moves. This may bode well for gold and crude oil prices alike, although the latter may find it harder to build significant momentum as risk appetite sours along with confidence in an aggressively hawkish Federal Reserve.
What do traders’ buy/sell decisions say about gold and crude oil price trends? Find out here !
GOLD TECHNICAL ANALYSIS – Gold prices are working on a fourth consecutive advance, which would make for the longest winning streak in two months. A daily close above the 1193.55-99.80 area (38.2% Fibonacci retracement, May 30 low) targets the 50% level at 1215.40. Alternatively, a reversal below the 23.6% Fib at 1166.51 exposes the 14.6% retracement at 1149.85.
CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices turned higher after finding support above the $50/barrel figure but falling short of overturning the recent series of lower highs and lows. From here, a daily close above the 14.6% Fibonacci expansion at 52.59 exposes the 23.6% level at 53.75. Alternatively, a reversal below the 38.2% Fib retracement at 50.25 sees the next downside barrier at 48.72, the 50% threshold.
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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