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CRUDE OIL & GOLD TALKING POINTS:

  • Crude oil prices up as Trump threatens Iran, OPEC mulls output cuts
  • Gold prices recoil from $1300/oz figure to test 9-month trend support
  • Speech from US Fed Chair Powell might weigh on commodity prices

Crude oil prices jumped higher at the start of the trading week after US President Trump threatened Iran via Twitter, warning officials in Tehran that if they want a fight, that will “be the end” of the Islamic Republic. Tensions between the two countries have been heating up since the US administration tightened sanctions on Iranian oil exports after withdrawing from an Obama-era nuclear disarmament deal.

Prices were probably helped higher as OPEC members led by Saudi Arabia meeting in Jeddah signaled a desire to extend an output cut accord through year-end. Russia – the leading non-OPEC producer participating in the scheme – may have other ideas however. Its energy minister Alexander Novak reportedly talked about relaxing restrictions, which expire next month if they are not renewed.

CRUDE OIL, GOLD PRICES MAY SUFFER AS FED CHAIR POWELL SPEAKS

The move higher may struggle to follow through as risk appetite falters. Scheduled comments from Fed Chair Jerome Powell headline an otherwise quiet offering on the economic calendar Monday. He is likely to reiterate the US central bank’s preference for a wait-and-see approach, dashing traders’ hopes for easing to support sentiment amid slowing global growth and mounting political uncertainty.

Cycle-sensitive oil prices are likely to be pressured lower alongside stocks in this scenario. Gold prices may likewise fall – extending a four-day losing streak – as fading rate reduction prospects boost the US Dollar and Treasury bond yields. That bodes ill for benchmark anti-fiat and non-interest-bearing asset. Markets currently price the probability of a cut before year-end at 73.5 percent.

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

GOLD TECHNICAL ANALYSIS

Gold prices slumped back to test support at a rising trend line guiding them higher since mid-August 2018, now at 1273.01. This is reinforced by at the 1260.80-63.76 inflection area. Breaking below the latter threshold exposes the 1235.11-38.00 zone next. Near-term resistance is in the 1303.70-09.12 region, followed by a minor hurdle in the 1323.40-26.30 price band along the way to February’s high at 1346.75.

Gold price chart - daily

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices are pressuring the outer layer of a dense resistance bloc running from 63.59 and through 67.03. If buyers manage to overcome the upper bound of this hurdle, a test of the $70/bbl figure may follow. Immediate support is at 60.39, with a reversal below that confirmed on a daily closing basis paving the way for a challenge of the 57.24-88 area.

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