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CRUDE OIL & GOLD TALKING POINTS:

Crude oil prices saw the return of risk aversion overwhelm supply considerations yesterday. The WTI benchmark tracked the bellwether S&P 500 index lower as the US allowed tariff exemptions for Canada, Mexico and the EU to lapse. A brief uptick courtesy of an unexpected 3.6 million barrel drop in inventories swiftly fizzled. Economists were projecting a modest 244k barrel build.

Gold prices likewise edged lower as deteriorating risk appetite translated into haven demand for the US Dollar, sending the currency higher and undermining the appeal of anti-fiat alternatives epitomized by the yellow metal. Losses were relatively modest however as bonds enjoyed similar support from safety-seeking capital flows, pressuring yields lower and helping the relative appeal of non-interest-bearing assets.

TRADE WAR FEARS MAY OVERSHADOW US JOBS DATA

Looking ahead, the May edition of US labor-market data headlines the economic calendar. An uptick in payrolls growth is expected to produce an increase of 190k jobs, the most in three months. The jobless rate and on-year wage inflation are seen holding steady at 3.9 and 2.6 percent, respectively. Such outcomes are unlikely to alter established Fed policy expectations, sapping their market-moving potential.

That seems likely to keep sentiment trends in the spotlight. Asia Pacific bourses curiously brushed off trade war jitters and futures tracking US and UK equities benchmarks are pointing higher, seemingly signaling that the sanguine mood will carry forward. Easing worries about political instability in Italy and the Trump administration’s many past trade policy reversals might be at work.

Alternatively, the calm in APAC trading hours might reflect nothing than the region’s absence from the new tariff increase. After all, most of the region was not exempt when the very same trade barriers were erected in March, so the US’ latest moves do little to alter the existing status quo. That clearly isn’t so for the EU and regional shares may reflect as much when local markets reopen, triggering another wave of liquidation.

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

GOLD TECHNICAL ANALYSIS

Gold prices remain stuck in familiar territory, wedged between support guiding the uptrend from December 2016 and a falling channel top set from mid-April. A push below support – now at 1291.71 – initially opens the door for a test of the 1260.80-66.44 area. Alternatively, a breach above the channel top and the outer layer trend support at 1309.32 exposes support-turned-resistance at 1323.60.

Gold price - daily chart

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices continue to hover near support in the 66.22-67.36 area. A daily below this and the rising trend barrier in place from June 2017 – presently at 64.35 – sees the next layer of support at 61.84. Alternatively, a turn back above the April 19 high 69.53 paves the way for another challenge of the May 22 top at 72.88.

Crude oil price - daily 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