Gold, Crude Oil Prices May Accelerate Lower on Upbeat FOMC

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GOLD & CRUDE OIL TALKING POINTS:

  • Gold and crude oil costs seesaw, echoing US Dollar after midterm election
  • Intraday features evaporated as markets threat urge for food, Fed fee hike bets firmed
  • Upbeat FOMC coverage announcement could punish commodity costs additional

Commodity costs seesawed within the aftermath of US midterm elections yesterday. Initial US Dollar weak point provided a elevate as markets frightened about fiscal coverage impasse after the Democrats secured a maintain on the House of Representatives whereas Republicans efficiently defended (and expanded) their majority within the Senate. The transfer got here undone over the course of the day nevertheless, as expected.

Perhaps most tellingly, the Greenback recovered alongside rising inventory costs whereas the priced-in 2019 rate of interest hike outlook implied in Fed Funds futures steepened to its most hawkish setting in a month. That seemingly ratifies last week’s forecast suggesting as a lot would occur as markets envision a growth- and inflation-boosting bipartisan infrastructure spending effort.

GOLD, CRUDE OIL MAY FALL AS US DOLLAR GAINS ON FOMC

From right here, the highlight turns to the FOMC financial coverage announcement. A fee hike is just not anticipated, with markets all however sure that additional tightening will wait till December. The tone of the accompanying coverage assertion could but be market-moving nevertheless, with an optimistic tone triggering a hawkish shift in baseline projections that sends USD greater. That bodes sick for gold and crude oil costs alike.

Evidence supporting such an consequence appears compelling. US knowledge outcomes have improved relative to forecasts since September’s conclave, in line with knowledge kind Citigroup. Meanwhile, main PMI survey knowledge factors to a progress pickup in October after 4 months of moderation. Further nonetheless, wage inflation has jumped to a nine-year excessive.

Learn what other traders’ gold buy/sell decisions say in regards to the value pattern!

GOLD TECHNICAL ANALYSIS

Gold prices are inching decrease after yet one more check of resistance within the 1235.24-41.64 space. Immediate assist is within the 1211.05-14.30 space, with a every day shut under that paving the way in which for a retest of the 1180.86-87.83 zone. Alternatively, a push above 1241.64 sees the following upside barrier within the 1260.80-66.44 area.

Gold price chart - daily

CRUDE OIL TECHNICAL ANALYSIS

Crude oil costs’ retest of support-turned-resistance at 61.84, April 6 low, led to failure, with an intraday rally evaporating and turning right into a loss by day’s finish. From right here, break under the $60/bbl determine exposes the February 9 backside at 58.11. Alternatively, a every day shut again above 61.84 opens the door for a retest of the 64.26-45 space. The longer-term setup on the weekly chart suggests a serious prime has been established.

Crude oil price chart - daily

COMMODITY TRADING RESOURCES

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

To contact Ilya, use the feedback part under or @IlyaSpivak on Twitter



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