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GOLD & CRUDE OIL TALKING POINTS:

  • Gold prices pressure trend support on cooling US/China tensions
  • Crude oil prices continue to show signs of topping below $72/bbl
  • Barebones economic calendar likely to put risk trends into focus

Gold prices managed a tepid recovery as the US yield curve flattened alongside the 2019 rate hike path implied in Fed Funds futures Friday, burnishing the relative appeal of non-interest-bearing assets. The move was probably corrective following the decidedly hawkish shift in the priced-in outlook for US monetary policy in the preceding week.

Crude oil prices edged lower, with the sentiment-sensitive WTI contract echoing a downswing in the bellwether S&P 500 stock index. Here too, the Fed seemed to be front-and-center. Bank shares led US equities downward as the cool-off in tightening speculation weighed against interest income prospects. The feedback loop from softer crude hurt energy producers’ stocks and compounded overall weakness.

US / CHINA DE-ESCALATION IN THE SPOTLIGHT

From here, a bare-bones offering on the economic calendar may put risk trends in the driver’s seat. Futures tracking UK and US equity benchmarks are pointing decidedly higher, buoyed by apparent de-escalation of US/China trade tensions. That has already hurt gold and helped crude oil in Asia Pacific trade. More of the same is probably in store absent a particularly worrying stray headline that disrupts momentum.

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

GOLD TECHNICAL ANALYSIS

Gold prices continue to cling to the outer layer of support guiding the uptrend from December 2016, now at 1287.15. Breaking below this barrier on a daily closing basis exposes the next layer of support in the 1260.80-66.44 area. Alternatively, a push back above 1305.13 eyes falling trend line resistance at 1314.89.

Gold daily price chart

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices continue to drift below resistance at 71.86, the May 10 high, with negative RSI divergence warning of ebbing upside momentum that may precede a downturn. A daily close below rising wedge support at 70.85 opens the door for a retest of former resistance at 69.53. Alternatively, a breach above 71.86 targets the wedge top at 73.43.

Crude oil daily price chart

COMMODITY TRADING RESOURCES

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

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter