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Gold Price Rally Stalls Before Comey Testimony, UK Election

Gold Price Rally Stalls Before Comey Testimony, UK Election

Talking Points:

  • Gold prices stall at 2-month high ahead of key event risk
  • Comey testimony, UK election to offer next direction cues
  • Crude oil prices sink on shocking EIA inventory statistics

Gold prices stalled after hitting a two-month high as markets braced for incoming event risk, as expected. Traders are waiting for the outcome of the UK general election to see who will win the dubious honor of leading Brexit negotiations. They are also watching testimony from former FBI director James Comey to see if he implicates senior White House staff in any wrongdoing as scandal continues to plague the fledgling Trump administration.

Outcomes that upend the status quo are likely to spook financial markets and push haven-seeking capital into Treasury bonds, driving down yields and boosting non-interest-bearing assets including gold. In practice, that might take the form of clear-cut and actionable evidence of a serious offense committed by a top-level member of team Trump. It might also take the form of anything other than a clear-cut win for the current Conservative government led by Prime Minister Theresa May in the UK.

Crude oil prices plunged after EIA inventory data showed stockpiles unexpectedly added 3.3 million barrels last week, trashing forecasts calling for a 3.14 million barrel outflow. Further still, gasoline and distillate stores shockingly added 3.3 and 4.4 million barrels, respectively. This pours cold water on hopes for a “summer driving season” boost to US demand even as markets remain skeptical about the ability of an OPEC-led output cut scheme to offer meaningful support.

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GOLD TECHNICAL ANALYSISGold prices paused to digest gains ahead of April’s swing high having rallied from support above the $1200 figure, as expected. From here, a daily close above the 50% Fibonacci expansion at 1300.73 exposes the 61.8% level at 1321.10.Alternatively, a move back below the 38.2% Fib at 1280.35 targets the 1256.74-60.12 congestion area.

Chart created using TradingView

CRUDE OIL TECHNICAL ANALYSISCrude oil prices plunged, posting the largest daily drop in two weeks. Near-term support is now in the 43.79-44.37 area (May 5 low, 76.4% Fibonacci expansion), with a break below that on a daily closing basis targeting the 100% level at 42.02. Alternatively, a sustained move back above the 61.8 % Fib at 45.82 opens the door for a retest of the 47.00-12 zone (support-turned-resistance, 50% expansion).

Chart created using TradingView

--- Written by Ilya Spivak, Currency Strategist for

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.