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Crude Oil Prices Surge on Kurdish Referendum, Gold Eyeing Yellen

Crude Oil Prices Surge on Kurdish Referendum, Gold Eyeing Yellen

2017-09-26 04:16:00
Ilya Spivak, Head Strategist, APAC
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Talking Points:

  • Crude oil prices surge on Kurdish independence vote outcome
  • Gold prices rise as US, North Korea spat continues to heat up
  • API inventory data, speech from Fed Chair Yellen due ahead

Crude oil prices surged as early results showed that over 93 percent of Kurds voted for an independent state in a referendum yesterday. The poll attracted a turnout of 72 percent despite efforts from Iraq and Turkey to disrupt it. Those two countries and Iran – which also shares a border with a would-be Kurdish state – strongly oppose its creation. As such, traders read the outcome as raising the threat of regional supply disruption.

From here, the spotlight turns to weekly inventory flow data from API. By way of context, official EIA figures expected to show an inflow of 2.4 million barrels. Prices may rise if API reports a smaller increase, hinting that refining capacity is recovering faster than expected after hurricane-linked disruptions. Needless to say, a larger build might put the WTI benchmark on the defensive.

Gold prices pushed higher as the war of words between the US and North Korea hit fever pitch. President Donald Trump said rogue nation “won’t be around for much longer”. DPRK Foreign Minister Ri Su-yong responded that Trump’s statement amounts to a declaration of war. That drove market-wide risk aversion, sinking bond yields and boosting the appeal of non-interest-bearing assets.

Looking ahead, risk-off momentum seems to have faded. Shares are little-changed in Asia Pacific trade and futures tracking the benchmark FTSE 100 and S&P 500 indices are treading water. That seems likely to put Fed policy speculation back into the spotlight, particularly as Chair Yellen delivers a much-anticipated speech. A confident tone boosting bets on another rate hike before year-end may hurt the yellow metal.

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GOLD TECHNICAL ANALYSISGold prices broke the series of lower highs and lows set from September’s swing top, hinting that – at the very least – the initial leg of the near-term down move is over. From here, a daily close above resistance at 1323.83 marked by the 23.6% Fibonacci expansion exposes the 38.2% level at 1346.09. Near-term support is at 1287.84, the September 21 low.

Crude Oil Prices Surge on Kurdish Referendum, Gold Eyeing Yellen

Chart created using TradingView

CRUDE OIL TECHNICAL ANALYSISCrude oil prices surged past resistance at 51.97, the May 25 high, to expose peaks in the 53.74-54.48 area. A move back below 51.97 – now recast as support – opens the door for a retest of the August 1 high at 50.40.

Crude Oil Prices Surge on Kurdish Referendum, Gold Eyeing Yellen

Chart created using TradingView

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

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

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