Talking Points:
Commodity prices retreated yesterday – with crude oil and gold dropping in tandem – as the US Dollar staged a sudden recovery following supportive comments from President Donald Trump. He said that he favored an “ultimately” stronger greenback, contradicting remarks from Treasury Secretary Steven Mnuchin made just a day earlier that seemed to celebrate recent depreciation as supportive for exporters.
The pendulum seems to be swinging the other way as Friday trade gets underway. Gold and crude oil prices are recovering while the US Dollar is back on the defensive as swelling risk appetite revives speculation that rosy global growth dynamics will see top central banks converging on the comparatively hawkish Fed, chipping away at the benchmark currency’s yield advantage and making alternatives look attractive.
Futures tracking the FTSE 100 and S&P 500 equity benchmarks are pointing convincingly higher before London and New York come online, hinting commodities will continue to recover in risk-on trade. The chipper mood may be upset by fourth-quarter UK and US GDP figures however. Slowdowns are expected on both fronts and any downside surprises beyond what is projected may sour sentiment.
GOLD TECHNICAL ANALYSIS
Gold prices paused to digest gains ahead of resistance at 1365.68, the 38.2%Fibonacci expansion, snapping a five-day winning streak. Still, the dominant near-term uptrend remains intact. A daily close above 1365.68 targets the 50% level at 1378.43. Alternatively, a turn back below the 1344.74-49.90 area (January 15 high, 23.6% Fib) exposes resistance-turned-support at 1325.96, the January 4 high).
Chart created using TradingView
CRUDE OIL TECHNICAL ANALYSIS
