Crude Oil, Gold Prices Rally to Resistance With Brexit Deal Around Corner
Crude Oil, Gold, XAU/USD, Brexit, US Stimulus, Technical Analysis - Talking Points:
- Crude oil and gold prices benefited from broad weakness in the US Dollar
- Brexit deal bets, US economic data kept market sentiment relatively upbeat
- Quiet trading conditions ahead: eyes on Johnson, Trump, new virus strain
Crude oil prices rallied over the past 24 hours, pausing two consecutive days of relatively aggressive losses. The growth-linked commodity followed a cautious recovery in market sentiment, mimicking gains in S&P 500 futures throughout the session. Meanwhile, anti-fiat gold prices also rallied, capitalizing on broad weakness in the US Dollar as it particularly lost ground to the British Pound.
Reports that the EU and UK are finally nearing an agreement to a Brexit deal after almost half a decade of back and forth bolstered Sterling and crude oil. Lawmakers seem to have reached an accord over fisheries. Ebbing uncertainty over a ‘no-deal’ is aiding energy prices as demand for haven-linked assets dwindled. UK Prime Minister Boris Johnson is reportedly going to have a press conference around 11:00 am local time.
During the Wall Street trading session, markets also welcomed upbeat US durable goods orders and initial jobless claims data, brushing aside pessimistic personal spending figures. Initial jitters around a delay to the US$900 billion Covid relief package were brushed aside. President Donald Trump asked Congress to amend the bill, expressing a desire for larger stimulus checks while wanting certain elements of the package removed.
While not explicitly threatening a veto, one which would likely be overturned by the Senate, he can refuse to sign the bill. With the Christmas holiday just around the corner and a relatively light economic docket ahead, all eyes will likely remain on Brexit and US stimulus developments. Further information about the new Covid strain can also risk market volatility. Otherwise, oil and gold may extend gains over the remaining 24 hours.
Crude Oil Technical Analysis
WTI crude oil prices bounced off the short-term 20-day Simple Moving Average, following the bullish implications of a ‘Golden Cross’ formed back in late November. Moreover, prices may aim for the 49.42 inflection point which was established back in early February. A climb above resistance would subsequently expose the February high at 54.45.
WTI Crude Oil Daily Chart
Gold Technical Analysis
Gold prices continue adhering to the short-term rising trendline from late November. At the same time, XAU/USD is struggling to make further upside progress beyond the 50-day SMA as prices hover above the 1848 – 1863 inflection zone. A push above ‘potential resistance’ on the daily chart below could open the door to a reversal of the dominant downtrend since August.
XAU/USD Daily Chart
--- Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.