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CRUDE OIL & GOLD TALKING POINTS:

  • Crude oil prices sink with stocks amid broad-based risk aversion
  • Gold prices fall as haven-seeking capital flows buoy the US Dollar
  • Commodities may rise with stocks on US, China trade dealhopes

Crude oil prices plunged alongside stocks as risk aversion swept financial markets. Gold prices likewise tumbled as the rout stoked haven-seeking demand for the US Dollar, pushing the benchmark currency to a two-week high and sapping the appeal of anti-fiat alternatives.

COMMODITIES MAY RISE ON CHINA, US TRADE DEAL HOPES

From here, the OPEC monthly oil market report and EIA drilling productivity statistics are in focus. That will continue to feed speculation about emerging supply trends, with the cartel and its allies warning that new output cuts may be needed while US production swells to record levels.

Sentiment trends may overwhelm other considerations however. Bellwether S&P 500 futures are pointing sharply higher, hinting at a potent risk recovery ahead. That may follow SCMP reports that China’s Vice Premier Liu He is due to visit the US shortly for talks aimed at easing trade war tensions.

If the chipper mood finds follow-through, crude oil prices may cling to onto a bounce in shares and manage a recovery after 11 consecutive days on the defensive (the longest losing streak since 1983). Gold might get a lift if the Greenback retreats against this backdrop but rising bond yields may cap gains.

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

GOLD TECHNICAL ANALYSIS

A seventh consecutive day of losses brought gold prices to challenge counter-trend support at 1198.78. A daily close below this barrier exposes the 1180.86-87.83 area. Alternatively, a reversal back above support-turned-resistance in the 1211.05-14.30 zone sees the next upside barrier in the 1260.80-66.44 region.

Gold price chart - daily

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices are testing critical support in the 58.66-11 area, marked by a trend line set from early 2016 and the February 9 low. A daily close below this barrier exposes the 54.48-55.21 zone, a resistance-turned-support band established between December 2016 and February 2017. Alternatively, a rebound back above the $60/bbl figure opens the door for a retest of the April 6 lowat 61.84. Longer-term positioning points to major bearish reversal in progress.

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