Talking Points:
- Crude oil prices muted despite supportive news flow
- Gold prices rise as FOMC keeps rates outlook as-is
- Trump 2018 budget request unlikely to make waves
Crude oil prices edged up but gains seemed restrained given the day’s news-flow. The IEA said markets are still working through oversupply built up before an OPEC output cut deal took effect this year, hinting they may yet see a larger boost from the cartel’s efforts. Meanwhile, DOE inventory flow data showed stockpiles fell for the first time since December last week. Also, the US Dollar weakened after the FOMC rate decision, which might have been expected to be de-facto supportive.
Broadly speaking, prices’ inability to mount a convincing rally against a backdrop of broadly supportive developments hints at a significant degree of underlying weakness. It is unclear whether sellers will have the wherewithal to generate a larger selloff amid a lull in top-tier event risk however. Friday’s release of Baker Hughes rig count data and the CFTC oil futures positioning data line up as the next key inflection points.
Gold prices rebounded as expected as the Federal Reserve delivered a widely expected rate hike but did little to advance the case for a steeper tightening path in the months ahead. An offering of second-tier US economic activity data seems unlikely to offer enough fuel for meaningful continuation however. US President Trump will also make a formal 2018 budget request to Congress. Fiscal policy details crucial to the rates outlook will be absent however, suggesting the impact for the yellow metal will be minimal at best.
How did our gold and crude oil forecasts fare as Q1 winds down? Find out here !
GOLD TECHNICAL ANALYSIS – Gold prices launched upward, posting the largest daily gain in nearly eight months. From here, a daily close above the 23.6% Fibonacci expansion at 1227.99 exposes the 38.2% level at 1248.58. Alternatively, a move back below the 14.6% Fib at 1215.29 opens the door for a retest of the March 10 low at 1194.70.
Chart created using TradingView
CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices continue to consolidate near the $49/bbl figure. Initial support is at 47.22, the 50% Fibonacci retracement, with a break below that exposing the 61.8% level at 45.33. Alternatively, a daily close back above the 38.2% Fib at 49.11 targets the 23.6% retracement at 51.44.
Chart created using TradingView
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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