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Talking Points:

  • Gold prices shrug off Fed-speak, stall at one-month low
  • Crude oil prices sink as Libyan output hits 4-year high
  • Risk aversion may lift gold, EIA inventory data on tap

The absence of a strong lead from the day’s offering of Fed commentary allowed gold prices a bit of time to consolidate after dropping to the lowest level in a month. Of the three speeches on tap, cautious remarks from Dallas Fed President Robert Kaplan seemed to be the most noteworthy. The markets seemed to shrug them off however, possibly because investors’ own baseline views are more dovish still already.

From here, a lull in top-tier economic data and an empty Fed-speak schedule leave the yellow metal without obvious catalysts. Sentiment trends may fill the void. Shares weakened in Asia and futures tracking the S&P 500 – a benchmark for market-wide risk appetite – are pointing lower to hint at more of the same ahead. If the sour mood persists, a downtick in bond yields may boost gold’s relative appeal and offer prices a lifeline.

Crude oil prices sank amid reports that Libya – a member of OPEC exempt from the cartel’s coordinated output cut deal – is producing at the highest level in four years. That stoked speculation that the OPEC-led effort will fail to shrink a supply glut. The focus now turns to EIA inventory flow data, expected to show a weekly draw of 1.01 million barrels.

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GOLD TECHNICAL ANALYSISGold prices paused to digest losses at support in the 1241.20-45.59 area (inflection point, 61.8% Fibonacci retracement). Breaking this barrier on a daily closing basis exposes the 76.4% level at 1233.67, followed by a rising trend line at 1229.05. Alternatively, a rebound above the 50% Fib at 1255.23 targets the 38.2% retracementat 1264.87.

Gold Prices May Find a Lifeline as Market Mood Darkens

Chart created using TradingView

CRUDE OIL TECHNICAL ANALYSISCrude oil prices punched through major support in the 43.79-44.10 area (channel floor, May 5 low, 38.2% Fibonacci expansion). From here, a daily close below the 50% level at 43.30 exposes the 61.8% Fib at 42.50. Alternatively, a turn back above 44.10 opens the door for a retest of the 45.09-32 region (23.6% expansion, May 4 low).

Gold Prices May Find a Lifeline as Market Mood Darkens

Chart created using TradingView

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

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