CRUDE OIL & GOLD TALKING POINTS:

  • Crude oil prices bounce from 2-month low as markets digest OPEC risk
  • EIA data matching API estimate may pass unnoticed, G7 summit in focus
  • Gold prices desperately cling to chart support but trend remains bearish

Crude oil prices managed a tepid recovery, correcting following a drop to a two-month low amid speculation that OPEC and like-minded producers are preparing to scale back a coordinated production cut scheme. API data showing US inventories shed 2.03 million barrels last week probably helped as well.

Gold prices edged up as a downshift in the priced-in 2019 rate hike path implied in Fed Funds futures sent the US Dollar lower alongside front-end Treasury bond yields. That bolstered the comparative appeal of anti-fiat and non-interest-bearing assets epitomized by the yellow metal.

EIA INVENTORY DATA, G7 SUMMIT IN FOCUS

On the data front, official EIA inventory flow statistics are now in focus. An outflow of 2.17 million barrels is expected, echoing the API projection. Such an outcome may pass without fireworks, with a substantive deviation likely needed to inspire a meaningful response from price action.

More broadly, a risk-on mood is prevailing around the markets and may continue to help lift the sentiment-linked WTI benchmark alongside stock prices. To the extent that Treasury bond yields rise in this scenario, such an environment may likewise bode ill for gold prices.

Worries about the upcoming G7 leaders’ summit might sour investors’ mood however amid concerns that trade tensions triggered by President Trump’s imposition of aluminum and steel tariffs on Canada and the EU will boil over. If such fears trigger a round of protective profit-taking, commodities may broadly suffer.

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

GOLD TECHNICAL ANALYSIS

Gold prices remain wedged between falling channel resistance (1299.66) and the bottom layer of rising trend support set form December 2016 (1292.74). A break below support opens the door for a test of the 1260.80-66.44 area. Alternatively, a push above resistance initially targets the outer layer of the trend boundary, now at 1310.54, followed by a former support level at 1323.60.

Gold price chart - daily

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices paused to digest losses at rising trend support set form June 2017. A daily close below this barrier, now at 64.55, initially opens the door for a test of the April 6 low 61.84. Alternatively, a recovery above resistance in the 66.22-67.36 area clears the way for a retest 68.64-69.53 congestion region.

Crude oil price chart - daily

COMMODITY TRADING RESOURCES

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

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