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CRUDE OIL & GOLD TALKING POINTS:

  • Crude oil prices edge gently lower after breaking trend support
  • Gold price action muted but overall setup carries bearish bias
  • All eyes now focused on resuming US, China trade negotiations

Crude oil prices tracked stocks lower amid broad-based deterioration in risk appetite yesterday. The downbeat mood appeared to reflect lingering worries about escalation in the US-China trade war. Gold prices edged marginally higher as the risk-off mood weighed on bond yields, but haven-seeking buying of the US Dollar undermined meaningful upside progress.

Dismal Chinese trade data showing an unexpected drop in exports looks to have been shrugged off for now as markets focus on the upcoming arrival of Chinese negotiators in Washington DC for another round of trade talks. Signs of sluggish progress are likely to translate into a replay of yesterday’s price action, while the appearance of a more conciliatory tone may turn it on its head as risk appetite rebuilds.

Likewise of note, EIA inventory flow statistics are expected to show that US stockpiles added 1.1 million barrels last week. Leading API data hinted at a larger 2.81-million-barrel rise yesterday, opening the door for a downbeat surprise that might pressure oil prices. Yesterday, the government predicted that US output will average 12.45 million barrels per day in 2019, a record high.

Did we get it right in our 2Q crude oil and gold forecasts? Get them here to find out!

GOLD TECHNICAL ANALYSIS

Gold prices remain caught between resistance set form late-February highs and support guiding the uptrend since mid-August 2018. Overall positioning seems to carry a bearish bias, courtesy of a recently completed Head and Shoulders (H&S) topping pattern. Downside resumption on a daily close below 1260.80 sees the next downside barrier in the 1235.11-38.00 area, although the H&S setup implies a measured move to 1215.00. Immediate resistance is at 1293.64, with a break above that exposing the 1303.70-09.12 zone.

Gold price chart - daily

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices are inching lower within the bounds of a narrow channel having broken rising trend support established from late-December lows. From here, a daily close below support at 60.39 exposes the 57.24-88 area next. On the topside, a dense layer of overlapping resistance levels extends up though 67.03. If prices were to break above that, the $70/bbl figure is likely to be back in the crosshairs.

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