Crude Oil Prices May Fall with Stocks as Risk Appetite Fizzles
CRUDE OIL & GOLD TALKING POINTS:
- Crude oil prices managed to diverge from FOMC-inspired volatility
- Gold price technical positioning suggests a top may be in the works
- S&P 500 futures hint at continued risk aversion amid news-flow lull
Crude oil prices were spared breakneck volatility inspired by yesterday’s Fed monetary policy announcement, with prices managing a corrective bounce after three days of aggressive selling. Gold prices were not so lucky, plunging close to 1.2 percent from the intraday high to the post-FOMC low. Chair Powell and company disappointed hopes for a sharp dovish pivot (as expected), undermining anti-fiat demand.
CRUDE OIL AT RISK, GOLD MAY STRUGGLE IN RISK-OFF TRADE
Looking ahead, a lull in high-profile event risk may keep sentiment trends at the forefront. Bellwether S&P 500 futures are pointing convincingly lower to hint that risk-off dynamics have scope for follow-through. That probably means that the path of least resistance points lower for cycle-sensitive oil prices. Gold may struggle for follow-through however, torn between softer yields and a stronger US Dollar.
See our guide to learn about the long-term forces driving crude oil prices !
GOLD TECHNICAL ANALYSIS
Gold prices failed to hold up above resistance marked by the December 10 high at 1250.88, dropping back to the bottom of their recent range. From here, a daily close below support in the 1233.60-41.80 area exposes rising trend line support at 1211.05. Alternatively, a sustained push above 1250.88 sees the next upside barrier in the 1257.60-66.44 zone.
CRUDE OIL TECHNICAL ANALYSIS
Crude oil prices paused to digest losses after sinking to the lowest level in 16 months. From here, a daily close below the December 18 low at 45.79 opens the door for a test of the 42.05-55 area. Alternatively, a move back above the November 29 low at 49.41 targets trend line support-turned-resistance at 51.60.
COMMODITY TRADING RESOURCES
- Learn what other traders’ gold buy/sell decisions say about the price trend
- 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
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.