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CRUDE OIL & GOLD TALKING POINTS:

  • Crude oil prices rise as markets weigh OPEC production outlook
  • Gold prices locked in place as US Dollar, Treasury yields diverge
  • Defensive pre-positioning for G7 summit may drive risk aversion

Crude oil prices enjoyed the largest upswing in a week as traders weighed up supply increase prospects ahead of an OPEC meeting later this month. Output caps imposed as part of a cartel-led scheme to drain a global supply glut may be relaxed, according to recent comments from Saudi Arabia and Russia.

That has pushed prices sharply lower in recent weeks, but traders now seem concerned that the two powerhouse producers may be met with resistance from other top suppliers. Iraq’s oil minister Jabbar al-Luaibi told Reuters that an output increase isn’t on the table at June’s gathering in Vienna.

Meanwhile, gold prices continued to struggle for lasting direction as the US Dollar and Treasury bond yields diverged, making for now-familiar conflicting cues. The greenback found a haven bid while rates lost ground as risk appetite soured in pre-positioning for upcoming G7 leaders’ summit, as expected.

CRUDE OIL AT RISK AS G7 MEETING NEARS

The gathering in Quebec getting underway Friday will be firmly in focus from here. A series of tweets from US President Donald Trump criticizing Canada and France set an aggressive tone, paving the way for fireworks as virtually every world leader in attendance positions against US protectionism.

This means that defensive de-risking of portfolios may gain momentum in the final hours of the trading week. That bodes ill for sentiment-linked oil prices, although directional conviction may be limited absent clarity from OPEC. Cartel members is due to meet on June 22. Meanwhile, gold may remain anchored.

See our guide to learn about the long-term forces driving crude oil prices!

GOLD TECHNICAL ANALYSIS

Gold prices remain stuck between falling channel resistance (1296.06) and the outer layer of trend support from December 2016 (1293.62). A break downward initially exposes the 1260.80-66.44 area. Alternatively, a close above the channel top targets the upper layer of trend support – now at 1310.54followed by a former support level at 1311.34.

Gold price chart - daily

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices are still looking for lasting direction at support marking the rising trend set from June 2017. A daily close below its bottom layer, now at 64.79, opens the door for a test of the April 6 low 61.84. Alternatively, a breach of resistance in the 66.22-67.36 area targets the 68.64-69.53 zone next.

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