Gold prices are languishing in digestion mode after issuing the largest daily advance in four months following May’s soft US jobs data. A widely anticipated speech from Fed Chair Janet Yellen offered little by way of actionable direction cues, leaving the metal rudderless. Crude oil prices rose, with the sentiment-linked WTI contract tracking the benchmark S&P 500 stock index upward.
Looking ahead, a relatively quiet day on the economic data front puts a revised set of first-quarter Eurozone GDP figures in the spotlight. An upside surprise may boost optimism about global growth trends and amplify an already building risk-on mood. Indeed, European shares and US stock index futures are pointing decidedly higher.
A swell in risk appetite seems likely to keep crude oil well-supported alongside equities, mirroring yesterday’s dynamics. Absent overhang from the Fed policy bets, gold may edge lower as ebbing haven demand weighs on bonds and pushes yields upward, undermining the appeal of non-interest-bearing assets.
GOLD TECHNICAL ANALYSIS – Gold prices paused to digest gains having recovered as expected following the appearance of a Bullish Engulfing candlestick pattern. Near-term resistance is at 1245.83, marked by a recently broken rising channel floor, with a reversal back above that aiming for a horizontal pivot at 1262.60. Alternatively, a drop below the 38.2% Fibonacci expansion at 1203.82 exposes the 50% level at 1172.99.
CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices put in the largest daily advance in two weeks but still failed to break out of a now-familiar range below $50/bbl. A daily close above the 14.6% Fibonacci expansion at 49.91 targets the 23.6% level at 51.16. Alternatively, a move below the 14.6% Fib retracement at 48.00 exposes the 23.6% barrier at 46.65.
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