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CRUDE OIL & GOLD TALKING POINTS:

  • Commodity prices mark time as US MLK Day holiday saps liquidity
  • Crude oil prices may fall as dour mood at Davos spooks the markets
  • Gold prices may stall even if yields fall as haven flows favor Dollar

Commodity prices marked time yesterday in what likely reflected diminished participation with US markets offline for the Martin Luther King Jr Day holiday. A shortened day on US futures exchanges did not attract bets of conviction on crude oil and the generally hands-off backdrop left gold rudderless despite the availability of trading in the off-exchange spot market.

CRUDE OIL PRICES MAY FALL ON DOUR MOOD IN DAVOS

Looking ahead, the World Economic Forum getting underway in Davos, Switzerland looks likely to take center stage. A barrage of comments from theeconomic policy and financial market bigwigs in attendance will offer will be closely examined for the prevailing view on the global business cycle as well as the outlook going forward. If the overallmood looks to have darkened, risk appetite may sour.

Crude oil may suffer in this scenario, tracking lower alongside stock prices. Gold may struggle to capitalize even if the risk-off mood weighs on bond yields however as haven demand buoys the US Dollar, undercutting the appeal of anti-fiat alternatives. In fact, these dynamics are already on display as sentiment sours ahead of the Davos gathering in Asia Pacific trade.

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

GOLD TECHNICAL ANALYSIS

Gold prices are probing below rising trend line support defining the rise from mid-November lows. Confirmation on a daily closing basis paves the way to challenge support in the 1260.80-63.76 area. A break above immediate resistance at 1298.54, the January 4 high, is needed to neutralize selling pressure.

Gold price chart - daily

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices continue to hover below resistance in the 54.51-55.24 zone. A break above this barrier confirmed on a daily closing basis initially exposes the chart inflection point at 59.05. Support is in the 49.41-50.15 area, with a reversal back below that ultimately setting the stage for a retest of the 42.05-55 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