GOLD & CRUDE OIL TALKING POINTS:
- Gold prices down as US Dollar, Treasury yields reflect hawkish Fed
- Crude oil prices pressuring chart support guiding six-month uptrend
- Fears of US/China trade war escalation might unleash risk aversion
Gold prices declined as US Treasury bond yields advanced alongside the US Dollar in anticipation of a hawkish Fed monetary policy announcement, sapping the appeal of non-interest-bearing alternatives. Crude oil prices likewise fell as the stronger greenback applied de-facto pressure on assets quoted in terms of the benchmark currency (as expected).
For their part, Chair Jerome Powell and company did not disappoint. While rates remained unchanged as widely predicted, the statement released following the meeting of the policy-setting FOMC committee sounded decidedly confident on growth and inflation prospects. That bolstered the probability of a fourth rate hike in 2018 to 58.8 percent, up from 56.5 percent recorded a week earlier.
TRADE WAR TENSIONS MAY HELP GOLD, HURT CRUDE OIL PRICES
From here, a lull in top-tier scheduled event risk may put sentiment trends in focus. Signs of escalation in trade war tensions between the US and China pushed shares lower in Asia Pacific trade and futures tracking the FTSE 100 and S&P 500 equity benchmarks hint more of the same may be ahead. That might weigh on bond yields, offering gold a lifeline. Crude oil may suffer alongside other risky assets however.
Learn what other traders’ gold buy/sell decisions say about the price trend!
GOLD TECHNICAL ANALYSIS
Gold prices remain locked in a choppy range above the 1200/oz figure. Breaking below the July 19 low at 1211.65 exposes the 38.2% Fibonacci expansion at 1197.94. Alternatively, a move above trend line resistance at 1220.02 paves the way for a retest of former support at 1236.66.
CRUDE OIL TECHNICAL ANALYSIS
Crude oil prices continue to hover at support set from early February. A daily close below its outer layer – now at 66.60 – opens the door for a test of the 63.96-64.26 area. Alternatively, a rebound above the 38.2% Fibonacci expansion at 71.52 targets the 50% level at 72.89 next.
COMMODITY TRADING RESOURCES
- See our guide to learn about the long-term forces driving crude oil prices
- Having trouble with your strategy? Here’s the #1 mistake that traders make
- Join a Trading Q&A webinar to answer your commodity market questions
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
To contact Ilya, use the comments section below or @IlyaSpivak on Twitter
