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CRUDE OIL & GOLD TALKING POINTS:

  • Crude oil prices prove more resilient than stocks after soft US retail data
  • Gold prices rise, encouraged by bond yield drop amid broad risk aversion
  • S&P 500 futures signal risk-off tone, US consumer confidence data due

Cycle-sensitive crude oil prices fell alongside stocks while gold prices rose following a dismal miss on US retail sales data. The yellow metal found support as the markets’ spooked response drove bond yields lower, bolstering the appeal of non-interest-bearing alternatives.

Shares attempted to mount a recovery – a move seemingly inspired by the premise that soft data will make for a more dovish Fed policy stance – and the WTI contract followed. In fact, its gains held up through the sessions’ end even as equities lost their footing slumped back toward intraday lows.

SHARP SWINGS IN MARKET MOOD PULL ON COMMODITY PRICES

The risk-off mood looks to have carried through into Asia Pacific trade, with soft Chinese inflation data providing further encouragement. It is perhaps understandable that signs of weakness in the world’s top-two economies are compounding already-pronounced global economic slowdown fears.

Bellwether S&P 500 futures are pointing convincingly lower, suggesting the defensive tone has scope for follow-through. That may pressure crude oil downward and boost gold prices as yields track lower. Incoming US consumer confidence data from the University of Michigan might check the anti-risk push however.

A preliminary look at February’s survey is expected to show that consumers’ disposition brightened after registering at its most pessimistic since October 2016 in the prior month. That might make yesterday’s retail sales print appear dated, helping revive risk appetite. Crude oil might manage gains in this scenario.

If yields recover in tandem, gold may retreat. The yellow metal might find a headwind in a stronger US Dollar even if sentiment continues to sour however. The Greenback is a frequent beneficiary of haven demand. If it is nudged higher by haven-seeking capital flows, the appeal of anti-fiat alternatives is likely to ebb.

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

GOLD TECHNICAL ANALYSIS

Gold prices continue to tread water above a support block running through 1294.10. A daily close below invalidates the uptrend from mid-November and exposes the next layer of support at 1276.50. Alternatively, a push above resistance at 1323.60 targets the trend-defining top in the 1357.50-66.06 area.

Gold price chart - daily

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices continue to pressure chart resistance, but a bearish Evening Star candlestick pattern still warns of topping. A daily close above the February 4 high at 55.75 would invalidate the setup and expose the 57.96-59.05 area. Alternatively, a downswing from here that takes out support in the 49.41-50.15 zone opens the door for a decline back toward 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