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CRUDE OIL & GOLD TALKING POINTS:

  • Crude oil prices continue to edge down after Chevron/Anadarko deal
  • Gold prices stall at key support, chart hints at major top in the works
  • RBA minutes, German ZEW and US industrial production data on tap

Crude oil prices continued to edge lower, building on Friday’s weakness. The move appeared to reflect follow-through on the markets’ response after Chevron agreed to buy Anadarko Petroleum, which markets seemed to see as likely to boost output. The monthly EIA drilling productivity report reinforced that idea. It projected that total US shale production will rise to a record 8.46 million barrels per day next month.

Meanwhile, gold prices probed a bit lower but ultimately finished the session little-changed. Treasury bond yields and the US Dollar tellingly idled in narrow consolidation ranges. This suggests the yellow metal was unable to find adequately eye-catching developments to generate a convincing directional lead for anti-fiat and non-interest-bearing asset demand trends.

CRUDE OIL PRICES MAY FALL AS GLOBAL SLOWDOWN FEARS RETURN

Looking ahead, a worried tone in minutes from April’s RBA meeting may stoke global slowdown fears. The downbeat mood may be reinforced if the German ZEW analyst sentiment survey and US industrial production data fall short of forecasts, echoing the tendency to disappoint on recent macroeconomic news-flow. That may trigger broad-based risk aversion.

Cycle-sensitive crude oil prices may fall in this scenario, although weekly API inventory flow data may muddy the waters a bit. It will be judged against expectations of a 1 million barrel rise to be reported in official DOE figures Wednesday. As before, the response from gold prices to sentiment-driven moves will continue to depend on the relative magnitude of divergent moves in yields and the US Dollar.

See the latest gold and crude oil forecasts to learn what will drive prices in the second quarter!

GOLD TECHNICAL ANALYSIS

Gold prices are testing neckline support at 1281.31, with a daily close below that confirming a bearish Head and Shoulders (H&S) pattern. That would initially expose the 1260.80-63.76 area, but the overall setup implies a subsequent drop toward the $1200/oz figure. Alternatively, a break back above the resistance in the 1303.70-09.12 zone targets the 1323.40-26.30 region next.

Gold price chart - daily

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices are cautiously pulling back from support-turned-resistance in the 63.59-64.88 area. Confirmation of a larger reversal needs a close below 60.39. That would violate the uptrend from late December and expose the 57.24-88 zone. Alternatively, a push above resistance and a subsequent barrier in the 66.09-67.03 region sets the stage for a test of the $70/bbl figure.

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