Crude Oil Prices May Turn Lower as Risk Appetite Unravels

Gold prices surged as US bond yields edged lower, implying that deteriorating Fed rate hike expectations may have bolstered the relative appeal of anti-fiat and non-interest-bearing assets. Crude oil prices likewise traded higher, bolstered by a recovery in risk appetite as well as a larger-than-expected weekly inventory drawdown reported by the EIA.

Looking ahead, a quiet economic data docket is likely to keep sentiment trends in the driver’s seat. S&P 500 futures are pointing decidedly lower ahead of the opening bell on Wall Street, hinting at a risk-off mood. That may bode ill for the sentiment-linked WTI contract. Meanwhile, gold may remain well-supported if haven flows boost bonds and keep benchmark yields under pressure.

GOLD TECHNICAL ANALYSIS – Gold prices resumed their advance after a brief period of consolidation, hitting the highest level in three weeks. A daily close above the 1262.60-62.55 area (23.6% Fibonacci expansion, horizontal pivot) exposes the 38.2% level at 1297.14. Alternatively, a move back below the 14.6% Fib at 1236.85 pave the way for a retest of the May 30 low at 1199.55.

CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices continued to push higher, rising to the highest level July 2015. From here, a daily close above the 38.2% Fibonacci expansion at 53.44 exposes the 50% level at 55.21. Alternatively, a move back below the 23.6% Fib at 51.26 targets the 14.6% expansion at 49.91.