Talking Points:
- Gold prices dip on Macron win, look to Fed-speak for next move
- Crude oil prices recoil from new 2017 low but remain vulnerable
- Muted response to OPEC jawboning hints oil selloff may resume
Gold prices briefly spiked down to a six-week low as Emmanuel Macron triumphed in the second round of the French presidential election. The outcome cheered investors, pushing bond yields briefly higher and weighing on the non-yielding yellow metal by extension.
The move proved short-lived however. Mr Macron bested hard-right rival Marine Le Pen by a margin of 65 to 35 percent, an outcome firmly in line with baseline projections ahead of the vote. That means the outcome did not offer investors anything particularly novel, undercutting follow-through.
Comments from Cleveland and St. Louis Fed Presidents Loretta Mester and James Bullard are now in focus. They may pass quietly however considering the markets’ near-term rates outlook seems to be firmly in place. That may relegate prices to digestion mode (unless an unscheduled catalyst emerges, of course).
Crude oil prices probed down to the lowest level yet this year amid what looked like accelerating liquidation on Friday. The move lost momentum and reversed course intraday however, with the WTI benchmark ending the day with an upside close that snapped a five-session losing streak.
The recovery tracked a rebound in S&P 500 futures, which in turn played out against a backdrop of a firming Euro. This hints that optimism may have reflected expectations of Mr Macron’s win. Needless to say, if this was indeed the lifeline offered to crude oil, it has been spent.
That leaves prices in a precarious position going forward. Baker Hughes rig count data put the number of active extraction sites at a two-year high while CFTC statistics showed net-long exposure to WTI futures has dropped to the lowest in six months.
Tellingly, what seemed like supportive comments from Saudi Energy Minister Khalid Al-Falih failed to excite buyers in Asian trade. This hints that OPEC jawboning about production cuts may have become impotent and warns that liquidation may soon return.
Retail traders are betting on higher gold prices. Find out here what that hints about the price trend!
GOLD TECHNICAL ANALYSIS – Gold prices are digesting losses after hitting the lowest level since mid-March. From here, a break below 1218.90 – an inflection point in play the beginning of the year – exposes the 38.2% Fibonacci expansion at 1199.07. Alternatively, a reversal back above support-turned-resistance at 1241.50 targets the 14.6% level at 1258.62.
Chart created using TradingView
CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices managed to hold support at 45.33, the 61.8% Fibonacci retracement. From here, a move back above resistance at 47.22, the 50% Fib, opens the door for a retest of 49.11 (38.2% Fib, trend line support-turned-resistance). Alternatively, a daily close below support exposes the 76.4% retracement at 43.00.
Chart created using TradingView
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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