Talking Points:
- Commodities mark time as all eyes turn to Trump inauguration
- Gold prices may be topping but follow-through is yet to appear
- Bearish crude oil price setup waiting for clear-cut confirmation
A lull in top-tier event risk left gold and crude oil prices rudderless over the past 24 hours. The spotlight now turns to the inauguration of US President-elect Donald Trump and any policy-specific comments that he might make in the accompanying speech.
An uncertain US fiscal outlook continues to bedevil investors attempting to nail down baseline growth and inflation expectations for the year ahead. Tellingly, the S&P 500 stock index – a benchmark for overall market sentiment trends – has gone virtually nowhere since mid-December.
With this in mind, traders will probably hold off on firm directional bets at least until the incoming President has spoken. The absence of concrete policy details in Mr Trump’s remarks has dented risk appetite before and may do so again, but markets may opt to digest whatever is said over the weekend before reacting.
Where will markets go in the months after the Trump inauguration? See our Q1 forecasts here !
GOLD TECHNICAL ANALYSIS – Gold prices have barely budged since putting in a bearish Dark Cloud Cover candlestick pattern but the setup’s topping implications remain intact. A daily close below 1199.80 exposes the 14.6% Fibonacci expansion at 1182.06. Alternatively, a move above the 38.2% Fib retracement at 1219.20 sees the next upside barrier in the 1248.98-50.65 area (50% level, June 24 low).
CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices continue to trace out the makings of a Head and Shoulders topping pattern. Confirmation of the setup calls for a close below the 50.25-69 area (38.2% Fibonacci retracement, January 10 low). Beyond that, the next support level comes in at 48.72, 50% level. Alternatively, a rebound back above 52.44 exposes the 23.6% Fib expansion at 53.75.
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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