Gold Prices Rise as AHCA Failure Cools Fed Rate Hike Outlook

2017-03-27 04:02:00

Talking Points:

Gold prices rise to monthly high after US healthcare reform bill fail
Crude oil prices pressured lower but clear breakdown remains elusive
Brent speculative positioning data, Fed-speak in the spotlight ahead

Gold prices rose as US Treasury bond yields and the US Dollar fell in tandem after the AHCA healthcare reform bill backed by the While House was shelved on Friday. The measure’s fate was interpreted as a referendum on the Trump administration’s ability to turn its campaign promises into policy.

AHCA’s failure poured cold water on rate hike bets conditioned on Trump’s inflationary economic platform of tax cuts, deregulation and infrastructure spending, as expected. Comments from Charles Evans and Robert Kaplan, Presidents of the Chicago and Dallas Fed branches respectively, are now in focus.

Crude oil prices are still struggling to find lasting direction cues having stalled above the $47/bbl figure two weeks ago. Downside pressure may be mounting however as swing supply continues to swell while OPEC members and like-minded producers outside the cartel struggle to find common ground.

Baker Hughes reported that the number of active US extraction rigs rose to the highest level since mid-September 2015 last week. Meanwhile, a joint committee of top producers over the weekend disappointed hopes for an extension of a supply cut accord that they painstakingly negotiated last year.

CFTC data showed large speculators continued to cut bets on price gains over the same period. Long exposure in the benchmark WTI crude oil futures contract now exceeds the short side by the smallest margin in four months. A positioning update on the more globally-oriented Brent yardstick is due today.

Retail traders are net buyers of gold. What does this hint about the price trend? Find out here !

GOLD TECHNICAL ANALYSIS – Gold prices are back on the offensive. A daily close abovethe 38.2% Fibonacci expansionat 1248.58 exposes the 1263.87-65.23 area (February 27 high, 50% level). Alternatively, a turn back belowthe 23.6%Fibat 1227.99 paves the way for a retest of the 14.6% level at 1215.29.

Chart created using TradingView

CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices a still struggling to find direction near pivotal support at 47.22 (50% Fibonacci retracement, rising trend line). Breaking this barrier on a daily closing basis opens the door or a test of the 61.8% levelat 45.33. Alternatively, a turn back above support-turned-resistance at 49.11, the 38.2% Fib, targets the 23.6% retracementat 51.44.