US Dollar Rise Sinks Crude Oil, Gold Prices

US Dollar Rise Sinks Crude Oil, Gold Prices


CRUDE OIL & GOLD TALKING POINTS:

  • US Dollar rise after FOMC minutes hurt gold and crude oil prices
  • First-quarter earnings reports form US banks now in the spotlight
  • Oil may fall as gold eyes rates vs USD divergencein risk-off trade

Commodity prices fell yesterday, pressured by a parallel rise in Treasury bond yields and the US Dollar. The benchmark currency gathered upward momentum having bottomed alongside front-end lending rates as March FOMC meeting minutes crossed the wires late Wednesday.

That would prove to set the tone for Thursday’s session. Risk appetite soured at the prospect of higher borrowing costs, leading sentiment-geared crude oil prices downward. Gold prices suffered too, weighed down by the diminished appeal of anti-fiat and non-interest-bearing assets.

CRUDE OIL, GOLD LOOK TO US BANK EARNINGS FOR DIRECTION

Looking ahead, the corporate earnings reporting season is in focus. First-quarter reports from banking giants JPMorgan and Wells Fargo take top billing Friday. Traders are probably at least as keen for forward guidance amid slowing global growth as they are for headline results.

A downbeat tone is likely to sour sentiment, pressuring crude oil lower alongside the spectrum of cycle-sensitive assets. As ever, the response from gold is likely to reflect the relative magnitude of subsequent moves in yields and the US Dollar. They tend to diverge in risk-off trade.

See the latest gold and crude oil forecasts to learn what will drive prices in the second quarter!

GOLD TECHNICAL ANALYSIS

Gold prices recoiled from a confluence of resistance in the 1303.70-09.12 area, marked by a chart inflection zone and a falling trend line set from late February. This puts neckline support at 1281.54 back in focus, with a daily close below that confirming the formation of a Head and Shoulders (H&S) top. The next layer of trend support is at 1258.57, but the H&S formation would imply a larger descent toward $1200/oz ahead.

Gold price chart - daily

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices pulled back from support-turned-resistance in the 63.59-64.88 area, but the near-term uptrend set from late December is still in place. A break below 60.39 would invalidate the rise, exposing the 57.24-88 area next. Alternatively, a push above resistance would be immediately met with another barrier in the 66.09-67.03infection zone. Beyond that, the focus turns to the $70/bbl figure.

Crude oil price chart - daily

COMMODITY TRADING RESOURCES

— 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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