Talking Points:

  • Gold prices rise as North Korea tensions spook risk appetite
  • Hawkish comments from Fed’s Fischer may gap gold gains
  • Crude oil prices look to EIA output data for direction clues

Gold prices rose as a dour mood prevailed in thin holiday trade. Stocks in Japan – one of the few major markets not closed for the Easter Monday holiday – declined in a move that appeared linked to geopolitical jitters after North Korea conducted a ballistic missile test (albeit unsuccessfully).

Investors appear concerned about escalation after reports emerging Friday said the administration would adopt a policy of “maximum pressure and engagement” in their approach to relations with Pyongyang. US Vice President Mike Pence is on a 10-day trip in the region to, among other things, pitch the new approach.

The US Dollar fell alongside benchmark US Treasury bond yields and the priced-in 2017 rate hike path implied in Fed Funds futures flattened. Not surprisingly, this helped the relative appeal of anti-fiat and non-interest-bearing assets.

Scheduled comments from Fed Vice Chair Stanley Fischer are in focus from here. Reaffirmation of the central bank’s intent to continue tightening amid signs of a significant slowdown in the first quarter may weigh on the yellow metal, though downward follow-through may be limited as political concerns persist.

Meanwhile, crude oil prices will look to the monthly EIA Drilling Productivity report for direction clues. Traders will look to the document for clues about the extent to which the rebound in US output will offset upward price pressure from an OPEC-led production cut scheme.

What will drive gold price trends through mid-year? See our forecast to find out!

GOLD TECHNICAL ANALYSISGold prices continue to push higher, with buyers setting their sights on the $1300/z figure. Breaking above the 1302.90-08.00 area (76.4% Fibonacci expansion, former support) on a daily closing basis exposes the 100% levelat 1336.19. Alternatively, a move back below the 61.8% Fib at 1282.31 targets the 1263.87-65.66 region (50% expansion, February 27 high).

Gold Prices Rise as North Korea Tensions Keep Markets on Edge

Chart created using TradingView

CRUDE OIL TECHNICAL ANALYSISCrude oil prices are waiting for fresh catalysts after recoiling from a one-month high. Support is marked by the 38.2% Fibonacci expansionat 52.04, with a daily close below that targeting the 23.6% level at 50.14. Alternatively, a move above the 50% Fibat 53.57 exposes the 55.10-21 area (January 3 high, 61.8% expansion).

Gold Prices Rise as North Korea Tensions Keep Markets on Edge

Chart created using TradingView

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

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