GOLD & CRUDE OIL TALKING POINTS:

  • Gold prices pressured lower, fundamental cross-currents stall progress
  • Crude oil prices fall on Venezuela output prospects, EIA inventory data
  • De-risking ahead of G7 summit may hurt crude oil as gold treads water

Gold prices stalled, torn between the competing influences of a falling US Dollar and rising Treasury bond yields. The markets continue to unwind last week’s Italy-inspired moves, with the exit of haven-inspired capital flows weighing on the greenback and bonds alike. That has put the yellow metal’s roles as anti-fiat alternative and non-interest-bearing asset benchmark in conflict.

Crude oil prices turned lower again as Venezuela said it could boost output if OPEC+ output caps are loosened. An unexpected surge in US inventories weighed as well. Official EIA data showed stockpiles added 2.07 million barrels last week, clashing with analysts’ forecasts calling for a 2.17 million barrel drop and an API estimate flagging a 2.03 million barrel drawdown.

G7 SUMMIT IN THE SPOTLIGHT

The upcoming G7 leaders’ summit is likely to dominate the spotlight from here. A lull in big-ticket scheduled event risk will give investors space to consider what might happen if the bellicose posture on trade negotiations adopted by US President Trump will produce settlement or escalation.

Worries about the latter might translate into preemptive de-risking that hurt crude oil alongside share prices. Gold may might remain stuck however as current trading patterns reverse while leaving the same underlying conflict firmly in place.

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

GOLD TECHNICAL ANALYSIS

The top of a falling channel set from set from mid-April continues to pressure prices toward the lower bound of a rising trend set from December 2016. A break downward confirmed on a daily closing basis exposes the 1260.80-66.44 area. Alternatively, a close above the channel top (1297.90) opens the door for a test of trend support’s upper layer at 1310.93.

Gold price chart - daily

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices continue to hover at trend support set from June 2017. Breaking below its outer layer – now at 64.98 – exposes the April 6 low 61.84. Alternatively, a move back above resistance in the 66.22-67.36 area sees the next upside barrier in the 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