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Talking Points:

  • Gold prices may breach range floor if US CPI tops expectations
  • Crude oil prices to vulnerable if inflation data boosts US Dollar
  • API inventory data may show crude stocks grew for a third week

Commodity prices were little-changed Monday, with a lull in top-tier event risk making for consolidation. Incoming US CPI data may revive volatility however. The headline on-year inflation rate is seen rising to 2.2 percent in February – a slight uptick within a narrow five-month range – but survey data hints an upside surprise might be on in the cards.

Unexpectedly brisk price growth might revive worries about a faster Fed rate hike path than what the markets have accounted for. That is likely to boost the US Dollar, applying de-facto pressure to commodities denominated in terms of the benchmark currency. Gold is naturally vulnerable as a standby anti-fiat asset in this scenario. Crude oil may also suffer outsized losses if the release triggers broad-based risk aversion.

Elsewhere on the docket, the weekly API inventory flow report will be unveiled. It will be judged against forecasts calling for a 2.2 million barrel build in crude stockpiles. Gasoline and distillate storage are expected to see outflows. Outcomes that leave stocks on net larger relative to forecasts are likely to bode ill for the WTI contract. Needless to say, the reverse is also the case.

Learn what retail traders’ gold buy and sell bets say about the price trend!

GOLD TECHNICAL ANALYSIS

Gold prices continue to tread water above support in the 1312.36-16.50 area (range floor, 38.2% Fib retracement). Breaking this barrier on a daily closing basis opens the door for a test of the 50% level at 1301.19. Alternatively, a push above range resistance at 1341.04 exposes the 38.2% Fib expansion at 1352.40.

Gold Prices May Break 2-Month Range on US Inflation Data

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices continue to trace out a Falling Wedge pattern, a typically bullish setup. A daily close above its upper boundary at 62.45 paves the way for a test of the February 26 high at 64.21. Alternatively, a drop below the 59.75-60.00 area (wedge floor, March 8 low) targets the February 9 bottom at 58.11.

Gold Prices May Break 2-Month Range on US Inflation Data

COMMODITY TRADING RESOURCES

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

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