Gold Prices Rise as Geopolitics Weigh on Market Mood
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Gold Prices Rise as Geopolitics Weigh on Market Mood

DailyFX.com -

Talking Points:

  • Gold prices get a boost as US Dollar, Treasury yields decline
  • Crude oil prices find shaky balance amid conflicting influences
  • Markets preoccupied with geopolitics as G20 meets in Bonn

Gold prices rose as the US Dollar fell alongside Treasury bond yields . The move may have reflected profit-taking after markets exhausted the week's Fed policy-defining news flow. Jitters ahead of an upcoming G20 foreign ministers' meeting - the first to be attended by members of the Trump administration - may have encouraged a cautious disposition. Traders are probably concerned that belligerent campaign rhetoric may re-emerge, especially after US Defense Secretary Mattis put the screws on NATO yesterday.

Crude oil prices finished yesterday's session little-changed, with the WTI benchmark seemingly finding a balance between conflicting catalysts. US Dollar weakness probably helped limit losses for the USD-denominated contract but a surge in inventories likely capped the upside. Stockpiles added 9.5 million barrels last week according to figures from the EIA, topping forecasts calling for a 3.5mb increase. The swell echoed a private-sector estimate from API .

Geopolitical concerns may continue to dominate the spotlight in the hours ahead. A lull in heavy-duty economics news flow will probably have investors wholly engrossed in the G20 proceedings in Bonn, Germany. S&P 500 futures are pointing lower ahead of the opening bell on Wall Street, hinting the mood remains uneasy. That seems to make for a supportive environment for gold, though how crude oil will respond is somewhat murky.

Are gold and crude oil prices matching DailyFX analysts' first-quarter bets? Find out here !

GOLD TECHNICAL ANALYSIS - Gold prices have yet to make good on a Bearish Engulfing candlestick pattern though the setup remains valid. A break below the 38.2% Fibonacci retracement at 1219.20 on a daily closing basis exposes the 23.6% level at 1182.36. Alternatively, a push above the 50% Fib at 1248.98 targets the 61.8% retracement at 1278.76.

Chart created using TradingView

CRUDE OIL TECHNICAL ANALYSIS - Crude oil prices remain stuck below range resistance at 53.86. A daily close above this barrier exposes the 55.21-65 area (January 3 high, 38.2% Fibonacci expansion). Alternatively, a drop below rising trend line support, now at 51.85, targets the 38.2% Fib retracement at 50.25.

Chart created using TradingView

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

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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