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GOLD & CRUDE OIL TALKING POINTS:

  • Crude oil prices fall with stocks but larger reversal unconfirmed for now
  • Gold prices down as US Dollar rise overwhelms support from lower rates
  • Eurozone PMIs, US retail sales, Italy outlook debate now in the spotlight

Sentiment-geared crude oil prices fell alongside stocks as risk appetite soured in Wall Street trade. Gold prices also edged lower. A supportive pullback in bond yields was overwhelmed by a recovery in the US Dollar. The benchmark currency attracted haven demand as the markets’ mood turned defensive, undermining the appeal of anti-fiat assets.

COMMODITIES AT RISK ON INCOMING DATA, ITALY OUTLOOK

A steady stream of eye-catching economic data informing investors’ global growth outlook is in focus from here. The Eurozone PMI survey roundup and US retail sales data take top billing. The former is expected to show the pace of regional factory- and service-sector accelerated a bit in April while the latter is seen delivering the largest monthly receipts rise since October.

Macro news flow out of the single currency area has improved relative to forecast recently, opening the door for supportive outcomes. Any cautious optimism that follows may be cooled as Italian lawmakers debate the government’s economic forecasts. The markets are likely to listen in with interest, wondering if another budget clash between Rome and EU authorities in Brussels is in the cards.

The anti-establishment administration of PM Giuseppe Conte recently cut its 2019 growth outlook from 1.0 to 0.2 percent and claimed a wave of privatizations will allow it to meet deficit reduction goals. If the tenor of discussions casts doubt on the latter part of the strategy, political instability fears might sour investors’ mood. Soft US retail data echoing a recent string of disappointments may reinforce the dour mood.

Crude oil is likely to weaken further if this cumulatively translates into another risk-off day for global financial markets. As before, the implications for gold will depend on the relative magnitude of divergent moves in bond yields and the US Dollar. If yesterday’s example proves to be telling, the yellow metal might continue to lose ground as traders’ defensive disposition puts a premium on USD’s unrivaled liquidity.

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

GOLD TECHNICAL ANALYSIS

Gold prices continue to drift lower after completing a Head and Shoulders (H&S) topping pattern. From here, a break below support in the 1260.80-63.76 area exposes the 1235.11-38.00 zone next, though the H&S setup implies a larger decline to 1215.00. A move back above neckline support-turned-resistance 1281.26 sets the stage for a retest of the 1303.70-09.12 region.

Gold price chart - daily

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices remain locked in a narrow range at resistance in the in the 63.59-64.88 area. This is reinforced by a further barrier in the 66.09-67.03 inflection zone, with a daily close above that opening the door for a test of the $70/bbl figure. Alternatively, a downward reversal confirmed on a break below 60.39 neutralizes the near-term uptrend and sets the stage to challenge the 57.24-88 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