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Gold Prices Eye Diverging US Dollar, Bond Yields for Direction

Gold Prices Eye Diverging US Dollar, Bond Yields for Direction

Ilya Spivak, Head Strategist, APAC

GOLD & CRUDE OIL TALKING POINTS:

  • Gold prices to weigh diverging yields, US Dollar in risk on/off trade
  • Crude oil prices stall to digest as chart positioning warns of topping
  • French GDP, US consumer confidence may stoke slowdown worries

Gold prices rose worries about slowing global growth continued to weigh on bond yields, improving the relative appeal of non-interest-bearing assets. The US Dollar offered a bit of reinforcement, correcting lower and offering a familiar lift to anti-fiat alternatives. Crude oil prices stalled, digesting after Friday’s broad-based de-risking.

FRENCH GDP, US CONSUMER CONFIDENCE EYED AMID SLOWDOWN FEARS

Looking ahead, French GDP and US consumer confidence figures headline the data docket. If the former brings a downgrade of fourth-quarter growth estimates while the latter disappoints bets on a second month of improvement, global slowdown fears may be reinforced. Recent news-flow has tended to undershoot relative to baseline forecasts.

Lending rates may fall further if the markets’ disposition remains defensive, pressuring gold upward. Gains may be capped if the Greenback rediscovers its capacity to attract haven-seeking capital flows. It has tended to do so recently when sentiment has become particularly dour. A more straight-forwardly negative response is likely from oil in this scenario but keeping an eye on incoming API inventory data is prudent.

Learn what other traders’ gold buy/sell decisions say about the price trend!

GOLD TECHNICAL ANALYSIS

Gold prices are testing resistance at 1326.30, with a break higher confirmed on a daily closing basis opening the door to revisiting the February swing high at 1346.75. Overall positioning still hints at the outlines of a choppy Head and Shoulders top but putting this scenario back in active play needs a turn below support in the 1303.70-09.12 area. Confirmation would then require a break of the pattern’s neckline, now at 1282.44.

Gold price chart - daily

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices continue to hover above three-month rising trend support, with a bearish Evening Star candlestick pattern hinting that a top may be taking shape. The setup needs a break below the 57.24-88 area for confirmation, exposing the 55.37-75 zone next. Alternatively, a breach above the 38.2% Fibonacci expansion at 60.45sets the stage for a test the 50% level at 62.28.

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

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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