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GOLD & CRUDE OIL TALKING POINTS:

  • Gold prices set yet another 6-year high as trade war fuels bets on global easing
  • Crude oil prices sink as growth outlook sours, US inventories unexpectedly rise
  • Bare data docket may allow consolidation, but volatility risk is still acutely high

Gold prices continued to rise Wednesday as building expectations of broad-based monetary stimulus expansion buoyed the relative appeal of non-interest-bearing alternatives. Financial markets are positioning for central banks to push back as trade war escalation compounds a slowdown in global economic growth on-going since early 2018.

Not surprisingly, this made for a less-than-supportive backdrop for cycle-sensitive crude oil prices. EIA inventory data showing stockpiles unexpectedly added 2.39 million barrels last week compounded selling pressure, sending the WTI benchmark to levels unseen since January. Reports citing an unnamed Saudi official saying the kingdom will not tolerate continued weakness helped prices steady a bit late into the session.

From here, a quiet day on the economic data docket might offer shell-shocked global markets a bit of space to consolidate. The risk of kneejerk volatility remains decidedly acute however. Indeed, a stray bellicose comment from officials in Washington or Beijing might trigger another dramatic rout across the spectrum of sentiment-geared assets at a moment’s notice.

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GOLD TECHNICAL ANALYSIS

Gold prices have challenged resistance marked by the 61.8% Fibonacci expansion at 1513.94. A break above that confirmed on a daily closing basis exposes the 76.4% level at 1540.70. Alternatively, a turn back below the 50% Fib at 1492.31 sets the stage for a retest of the 38.2% expansion at 1470.68.

Gold price chart - daily

Gold price chart created using TradingView

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices fell to a two-month low near the $50/bbl figure, as expected. A daily close below the outer layer of support at 49.41 sets the stage to challenge the 42.05-43.00 zone, a barrier capping losses since September 2016. Alternatively, a move above resistance at 56.09 targets a falling trend line at 59.16.

Crude oil price chart - daily

Crude oil price chart created using TradingView

COMMODITY TRADING RESOURCES

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter