Crude Oil Prices at Risk if Soft US Data Feeds Slowdown Worries

Crude oil prices rallied alongside stocks as US jobs data revealed an unexpected drop in wage inflation. That triggered a dovish shift in Fed policy bets, pushing yields downward and stoking risk appetite. Gold prices attempted to capitalize lower lending rates but an elevated US Dollar – which began to recover early in the day and held up reasonably well through the data release – capped the metal’s progress.

CRUDE OIL AT RISK IF US DATA FEEDS GLOBAL SLOWDOWN FEARS

Looking ahead, a defensive mood at the start of the trading week may be amplified if US durable goods and factory orders data falls short of expectations, feeding global slowdown fears. A downbeat result would be consistent with broad deterioration in macroeconomic news flow over recent months. Bellwether futures tracking top European and US stock indexes are pointing tellingly lower.

A risk-off outcome bodes ill for cycle-sensitive oil prices, although they have managed to hold up reasonably well in early APAC trade following reports of violence in Libya. That seems to have been taken as a supply disruption threat. Gold rose overnight as the Greenback struggled to capitalize on risk-off price action. It may struggle for follow-through if the benchmark currency reclaims support from haven flows, however.

GOLD TECHNICAL ANALYSIS

Gold prices continue to show the makings of a bearish Head and Shoulders chart pattern. Confirmation of the setup on a daily close below its neckline – now at 1283.48 – would initially expose rising trend support set from August 2018 (currently at 1256.28). Alternatively, a rebound back above support-turned-resistance in the 1303.70-09.12 zone targets 1326.30 next.

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices are pushing up against support-turned-resistance in the 63.59-64.43 area once again, with negative RSI divergence warning of ebbing upside momentum. That may precede a bearish reversal. Confirmation on a daily close below trend line support at 59.55 initially targets the 57.24-88 zone. Alternatively, a break above 64.43 sees the next upside barrier in the 66.09-67.03 inflection region.