Talking Points:
- Gold prices retreat from 3-month high as the US Dollar gains
- Stronger USD applies de-facto pressure on crude oil prices
- API data, news-flow from Washington in the spotlight ahead
Gold prices turned lower as the US Dollar soared alongside US Treasury bond yields, undermining demand for anti-fiat and non-interest-bearing assets. Crude oil prices followed suit, with the USD-denominated WTI benchmark succumbing to de-facto selling pressure as the greenback worked on what may be the largest advance in three weeks by day’s end. The move may reflect a White House effort to weaken the Dodd-Frank bank regulation law.
A relatively lackluster offering on the economic data front is likely to keep markets engrossed in news-flow coming out of Washington, DC. The newly minted administration is yet to offer concrete details on a lofty fiscal stimulus effort it had promised. The promise of corporate tax cuts and generous infrastructure spending heartened investors in the weeks immediately after the election but the mood has since soured absent concrete policy proposals. The API weekly inventories report is also on tap.
Will gold and crude oil continue to rise through the rest of the first quarter? See our forecasts here !
GOLD TECHNICAL ANALYSIS – Gold prices are pulling back after rising to a three-month high. A daily close back below the 50% Fibonacci expansion at 1229.40 opens the door for a retest of the 38.2% level at 1217.91. Alternatively, a push above the 61.8% Fib at 1240.88 targets the 76.4% expansion at 1255.08.
CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices continue to mark time in familiar territory. A push above resistance at 53.86 on a daily closing basis exposes the 55.21-65 area (January 3 high, 38.2% Fib expansion). Alternatively, a move below support at 52.44 sees the next downside barrier at a rising trend line capping losses since early December, now at 51.62.
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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