CRUDE OIL & GOLD TALKING POINTS:
- Crude oil prices rise to four-year high on US/China de-escalation
- Technical setup still hints at topping, API inventory data in focus
- Gold prices precariously cling to trend support, but for how long?
Crude oil prices rose as the markets' mood brightened amid signs of de-escalation in US/China trade tensions, as expected . Interestingly, gold prices also rose as the exuberant mood translated into a weaker US Dollar. Commodity-linked and emerging market currencies geared to the global business cycle soared against the greenback, echoing as an overall down move. That understandably lifted the go-to anti-fiat asset.
GOLD MAY RETREAT AS FOMC MINUTES LOOM, OIL EYES API DATA
Looking ahead, investors' initial exuberance may cool absent specifics of a lasting US/China accord. In turn, this may allow Fed policy speculation to reclaim its perch as the central concern for financial markets before minutes from the May 2 FOMC meeting cross the wires Wednesday. That might discourage overexposure to short-USD positions and send the greenback higher amid profit-taking, pressuring gold prices.
As for crude oil, they will be looking to the weekly API inventory flow report . The outcome will be judged relative to expectations calling for 2.06 million barrel drawdown to be reported in official EIA statistics due Wednesday. A larger outflow may boost prices while a smaller one - or even a surprise build - might pressure them downward. A resurgent US Dollar is likely to be a headwind either way.
See our quarterly crude oil price forecast to learn what will drive the trend through mid-year !
GOLD TECHNICAL ANALYSIS
Gold prices remain stuck at the outer layer of support guiding the rising trend from December 2016, now at 1287.94. A daily close below that sees the next downside threshold in the 1260.80-66.44 area. Alternatively, a turn back above channel floor support-turned-resistance at 1298.52 targets a falling trend line at 1312.84.
CRUDE OIL TECHNICAL ANALYSIS
Crude oil prices breached resistance at 71.86, the May 10 high, exposing a rising wedge top at 73.64. Negative RSI divergence continues to warn of an incoming turn lower. A reversal back below 71.86 and breach of wedge floor support at 71.18 opens the door for a retest of the April 19 high at 69.53.
COMMODITY TRADING RESOURCES
- See our guide to learn about the long-term forces driving crude oil prices
- Having trouble with your strategy? Here's the #1 mistake that traders make
- Join a Trading Q&A webinar to answer your commodity market questions
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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