Talking Points:
- Crude oil prices weighed down by risk trends as sentiment sours
- Head and Shoulders pattern continues to hint that WTI is topping
- Gold prices bounce from 2-week low, have scope to extend gains
Crude oil prices fell alongside shares and the US Dollar on Friday while gold prices edged up, rebounding from a two-week low. The news-wires chalked up the move to a disappointing US GDP report that showed the annualized growth rate slipped to 1.9 percent in the fourth quarter. This undershot forecasts calling for a print at 2.2 percent and marked a significant slowdown from the 3.5 percent recorded in the three months through September.
In fact, the move started well before the data crossed the wires, although it does seem to have amplified momentum. The typically cycle-sensitive WTI and Brent crude oil benchmarks followed European stocks downward and US Treasury bonds – the standby safe haven asset market-wide – dutifully advanced, pressuring yields lower. That this did not prove to be supportive for the greenback, another go-to beneficiary of risk aversion, may hint that traders see eroding sentiment as roadblock for Fed rate hikes.
The risk-off dynamic carried over into Asian trade as the new week began. S&P 500 index futures are pointing decidedly lower as Europe comes online, pointing to more of the same ahead. On the data front, the Fed’s favored PCE inflation gauge takes top billing, with an uptick to 1.7 percent expected. While that might have been supportive for rate hike bets under normal circumstances, lingering uncertainty about on-coming fiscal policy may leave investors unconvinced.
Are retail traders buying or selling gold, and what does that hint about the trend? Find out here !
GOLD TECHNICAL ANALYSIS – Gold prices found interim support below the $1200/oz figure after turning downward as expected. From here, a daily close below the 14.6% Fibonacci expansion at 1183.28 opens the door for a test of the 23.6% level at 1160.57. Alternatively, a reversal back above the 1200.00 threshold sees the next upside barrier at 1219.20, the 38.2% Fib retracement.
CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices continue to build the outlines of a bearish Head and Shoulders (H&S) chart pattern.A break below near-term support at 52.44 exposes the 50.25-69 area (38.2% Fibonacci retracement, January 10 low), with a subsequent close below that confirming the topping setup. Alternatively, a move above the 23.6% Fib expansionat 53.75 targets the 55.21-65 region (January 3 high, 38.2% expansion).
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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