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CRUDE OIL & GOLD TALKING POINTS:

  • Crude oil prices rise as US inventories fall most in 8 months
  • Gold prices advance on unexpectedly dovish Fed policy call
  • Downbeat SNB and BOE may stoke global slowdown fears

Crude oil prices soared as EIA inventory flow data revealed an unexpectedly large 9.59-million-barrel drop in stockpiles. That marks the largest one-week drawdown in eight months. Gasoline and distillate storage also shrank more than analysts projected.

Gold prices rose as the Federal Reserve took a more dramatically dovish turn in both policy and guidance than investors anticipated. Officials slashed growth and inflation forecasts while dropping the previously projected pair of interest rate hikes from their 2019 outlook.

This mostly matched the priced-in view prevailing in the markets and might’ve passed with little fanfare. Language in the FOMC policy statement implying that the next rate move may be down as well as the tapering of QT asset sales from $50 to $35 million per month marked potent surprises however.

DOWNBEAT SNB, BOE MAY STOKE GLOBAL SLOWDOWN FEARS

Looking ahead, concerns about global economic growth may dominate the spotlight. Wall Street tellingly failed to sustain post-Fed gains as the central bank’s defensive posture stoked slowdown fears, ending the day with a loss. A similar pattern emerged in the Asia Pacific trade.

Another round of worried remarks from monetary officialdom may come via incoming policy announcements from the SNB and the Bank of England. Cycle-sensitive oil prices may retreat while gold gains against the backdrop of lower bond yields if this encourages more hang-wringing from investors.

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

GOLD TECHNICAL ANALYSIS

Gold prices broke above resistance in the 1303.70-10.95 area, opening the door for a test 1326.30. A daily close above that exposes February’s swing high at 1346.75 anew. Alternatively, a turn back below 1303.70 puts the would-be neckline of a Head and Shoulders top – now at 1282.11 – back in the crosshairs. Breaching below that may signal a major top and set the stage for a move toward $1220/oz.

Gold price chart - daily

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices breached resistance marked by the 50% Fibonacci retracement at 59.63. The next near-term upside barrier comes in at 60.45, the 38.2% Fib expansion, followed another minor hurdle at 62.28. A truly potent obstacle awaits in the 63.59-64.43 area however, marked by a major former support as well as the 61.8% retracement and expansion levels. Alternatively, a turn back below 59.63 eyes the 57.24-88 zone.

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