Talking Points:
- Gold prices continue to decline following hawkish FOMC
- Oversupply worries keep crude oil prices under pressure
- Lull in top-tier event risk may offer room for consolidation
Gold prices continued to move lower as the front-end Treasury bond yields and the US Dollar continued to rise in tandem following a hawkish FOMC monetary policy announcement. Looking ahead, a relatively light offering of fundamental news-flow may give way to consolidation ahead of the week-end.
The University of Michigan will offer a first look at the June edition of its US consumer confidence gauge, with a slight downtick expected. This may not garner much attention from the markets however considering the Fed’s apparent determination to dial back stimulus despite recently disappointing economic data.
US politics remain a wildcard however. Headlines linked to the investigation into possibly improper contact between Russian officials and the Trump campaign continue to pour out of Washington DC. The specter of bombshell news that spooks markets and sends gold higher is at this point ever-present.
Crude oil prices remained under pressure, ticking down to a six-week low in what looked like continuation following the previous day's sharp selloff. Momentum may slow as consolidation sets in ahead of the weekend. Baker Hughes rig count data is on tap but may pass unnoticed absent a shock downtick.
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GOLD TECHNICAL ANALYSIS – Gold prices have slid to a new three-week low. Near-term support is now in the 1241.20-45.59 area (inflection point, 61.8% Fibonacci retracement), with a break below that on a daily closing basis exposing a rising trend line set from late January, now at 1227.17. Alternatively, a reversal back above the 50% level at 1255.23 opens the door for a retest of the 38.2% Fib at 1264.87.
Chart created using TradingView
CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices stand at pivotal support in the 43.79-44.10 area (channel floor, May 5 low, 38.2% Fibonacci expansion). A daily close below this threshold initially exposes the 50% level at 43.30. Alternatively, a bounce back above the 45.09-32 zone (23.6% Fib, May 4 low) paves the way for another challenge of the 46.69-47.12 region (June 12 high, chart inflection point).
Chart created using TradingView
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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