Talking Points:

  • Gold prices get a boost as US Dollar, Treasury yields decline
  • Crude oil prices find shaky balance amid conflicting influences
  • Markets preoccupied with geopolitics as G20 meets in Bonn

Gold prices rose as the US Dollar fell alongside Treasury bond yields. The move may have reflected profit-taking after markets exhausted the week’s Fed policy-defining news flow. Jitters ahead of an upcoming G20 foreign ministers’ meeting – the first to be attended by members of the Trump administration – may have encouraged a cautious disposition. Traders are probably concerned that belligerent campaign rhetoric may re-emerge, especially after US Defense Secretary Mattis put the screws on NATO yesterday.

Crude oil prices finished yesterday’s session little-changed, with the WTI benchmark seemingly finding a balance between conflicting catalysts. US Dollar weakness probably helped limit losses for the USD-denominated contract but a surge in inventories likely capped the upside. Stockpiles added 9.5 million barrels last week according to figures from the EIA, topping forecasts calling for a 3.5mb increase. The swell echoed a private-sector estimate from API.

Geopolitical concerns may continue to dominate the spotlight in the hours ahead. A lull in heavy-duty economics news flow will probably have investors wholly engrossed in the G20 proceedings in Bonn, Germany. S&P 500 futures are pointing lower ahead of the opening bell on Wall Street, hinting the mood remains uneasy. That seems to make for a supportive environment for gold, though how crude oil will respond is somewhat murky.

Are gold and crude oil prices matching DailyFX analysts’ first-quarter bets? Find out here!

GOLD TECHNICAL ANALYSISGold prices have yet to make good on a Bearish Engulfing candlestick pattern though the setup remains valid. A break below the 38.2% Fibonacci retracementat 1219.20 on a daily closing basis exposes the 23.6% level at 1182.36. Alternatively, a push above the 50% Fib at 1248.98 targets the 61.8% retracementat 1278.76.

Gold Prices Rise as Geopolitics Weigh on Market Mood

Chart created using TradingView

CRUDE OIL TECHNICAL ANALYSISCrude oil pricesremain stuck below range resistance at 53.86. A daily close above this barrier exposes the 55.21-65 area (January 3 high, 38.2% Fibonacci expansion). Alternatively, a drop below rising trend line support, now at 51.85, targets the 38.2% Fib retracement at 50.25.

Gold Prices Rise as Geopolitics Weigh on Market Mood

Chart created using TradingView

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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