Gold Prices Edge Down as US Dollar, Treasury Bond Yields Rise

2017-05-10 05:00:00 Ilya Spivak

Talking Points:

Gold prices decline as Treasury bond yields, US Dollar rise
Crude oil prices shrug off API data, drop as greenback gains
EIA inventory report, risk appetite trends in focus form here

Gold prices fell as US Treasury bond yields rose and the US Dollar followed. This undermined demand for non-interest-bearing and anti-fiat assets. Crude oil prices declined alongside the yellow metal, hinting that the move lower probably reflected de-facto selling pressure from a stronger greenback. Indeed, the WTI benchmark barely budged as API reported that inventories shed 5.79 million barrels last week.

Looking ahead, it is another quiet day on the US data front. Still more commentary from Fed officials is likely to fall on deaf ears considering a rate hike next month is already priced in. That leaves gold to the mercy of risk appetite and its impact on yields. Official EIA inventory data is expected to show a 2.08 million barrel drawdown. A larger outflow that falls closer in line with API’s estimate may pressure crude oil further.

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GOLD TECHNICAL ANALYSIS – Gold prices continue to edge lower but a clear break of inflection point support at 1218.90 remains elusive. A breach confirmed on a daily closing basis 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 continue to consolidate above the 61.8% Fibonacci retracementat 45.33. A daily close below that exposes the 76.4% levelat 43.00. Alternatively, a move back above the 50% Fib at 47.22opens the door for a retest of 49.11 (38.2% retracement, trend line support-turned-resistance).