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CRUDE OIL & GOLD TALKING POINTS:

  • Crude oil prices rise as geopolitical tensions escalate anew
  • WTI chart setup warns of topping, API inventory data ahead
  • Gold prices may extend drop as yields rise in risk-on trade

Crude oil prices returned to the offensive as geopolitical tensions reclaimed the spotlight. An uptick in hostilities between Saudi and Iran-backed Houthi forces in Yemen claimed the life of a top commander from the latter group, opening the door for escalation that might bring supply disruption. At the same time, Libya’s largest export terminal wentoffline for repairs following on attack on the pipeline supplying it.

Separately, official customs data form China showed that gasoline and diesel exports hit a record high last month. This may be because the domestic market is oversupplied, which is hardly encouraging for global prices. If the world’s second-largest economy is attempting to make a lasting play for a piece of the global refining business however, it might portend a structural upshift in crude demand.

Gold prices remained on the defensive, sinking to a three-week low as the US Dollar continued to march upward. The greenback has been on offensive since late last week after hawkish comments from Fed Governor Brainard helped inspire steepening of the expected Fed rate hike path. Not surprisingly, that has undermined the appeal of non-interest-bearing and anti-fiat assets epitomized by the yellow metal.

RISK SENTIMENT TRENDS, API DATA IN FOCUS

Looking ahead, API crude oil inventory flow data is in focus. The outcome will be sized up against forecasts calling for 1.37 million barrel outflow to be reported in official EIA statistics due Wednesday. If the private-sector estimate contrasts with that baseline one way or the other, volatility is likely. Meanwhile, S&P 500 futures are hinting yields may continue to rise in risk-on trade, subjecting gold to further selling pressure.

See our quarterly crude oil forecast to learn what will drive prices through mid-year!

GOLD TECHNICAL ANALYSIS

Gold prices continued to push down for a third consecutive day. From here , a daily close below swing low support at 1321.37 opens the door for a test of a long-standing range floor at 1307.63 Alternatively, a move back above the April 13 low at 1333.42 exposes support-turned-resistance at a recently broken rising trend line at 1344.11.

Crude Oil Prices Eye API Data as Chart Setup Warns of Downturn

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices continue to consolidate below the 38.2% Fibonacci expansion at 69.25. Negative RSI divergence hints at ebbing upside momentum, hinting a turn lower may be brewing ahead. A daily close below the 67.85 (23.6% level, trend line) targets resistance-turned-support at 66.22. Alternatively, a push above 69.25exposes the 50% Fib at 70.39.

Crude Oil Prices Eye API Data as Chart Setup Warns of Downturn

COMMODITY TRADING RESOURCES

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

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