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POINTS FOR DISCUSSION OF RAW OIL AND GOLD:
- Crude oil prices rise slightly to challenge the resistance of the two-month trend
- The price of gold slips after the break in the support line up in the short term
- Testimony of Fed Chairman Powell, FOMC minutes could hurt commodities
Crude oil prices reflected a modest recovery in risk appetite, stimulating the recovery of the S & P 500 flagship index. Gold prices rose slightly in tandem. These developments probably reflect the pre-positioning of the major event risk ahead, as markets expect highly anticipated forecasts. Testimony of Fed President Fedell before the Congress as well as the release of Minutes of the June FOMC Policy Meeting.
The main problem at stake is the gaping disparity between the outlook for the Fed's future monetary policy and that of the financial markets. The June forecast update envisaged a 25 basis point reduction by the end of 2020. Investors are far from optimistic, with at least two and perhaps three cuts (for a total relaxation of 50 at 75 basis points) before the end of this year.
RAW OIL AND GOLD PRICES CAN FALL ON POWDER TESTIMONIAL AND FOB MINUTES
Markets have preceded the Fed in a political pivot since late 2018. To the extent that they are already optimized for rapid easing, comments suggesting that the central bank will continue to track investor investment may have relatively little leeway for an additional adjustment. However, concerns over the dire conditions under which such actions would be conducted could have a destabilizing effect on the demand for US dollars.
On the other hand, a rhetoric equivalent to resistance against a potential dovish excess from the market point of view could force traders to reconsider their expectations in a more modest context. Unsurprisingly, the bank note also seems likely to find support in this scenario. This seems to suggest that stasis could be the best scenario for oil prices, while gold appears globally vulnerable to sales pressure.
Get the last crude oil and gold forecasts to see what will drive prices in the third quarter!
TECHNICAL ANALYSIS GOLD
Gold prices languish in digestion mode after slightly exceeding the trend line, allowing the upward trend since the end of May. Sellers face a dense support block crossing 1346.75 from here. Critical resistance remains at 1433.85, marked by the peak reached in August 2013 and the support of the upward trend that began in December 2016.
TECHNICAL ANALYSIS OF GROSS OIL
Crude oil prices have risen slightly to test the cap resistance of earnings since the end of April, now at 59.43. A daily fence above which is quickly followed by an old support in the area 60.39-95. Alternatively, a lower rejection that takes the price under support at 54.55 targets the 50.31-51.33 area.
COMMERCIAL RESOURCES ON GOODS
— Written by Ilya Spivak, Currency Strategist for DailyFX.com
To contact Ilya, use the comments section below or @IlyaSpivak on Twitter
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