Gold Prices Hit 3-Month High as Fed Rate Hike Outlook Sours

Gold prices rose as US rate hike bets cooled. The priced-in projection for the year-end level of the benchmark Fed Funds rate fell to the lowest in two months, pulling Treasury bond yields and the US Dollar down in tandem. This bolstered the appeal of non-interest-bearing and anti-fiat assets including the yellow metal.

Crude oil prices rebounded following the prior day’s dramatic selloff despite a DOE report showing inventories rose by 13.8 million barrels last week. While this was much higher than the 2.7m build expected by economists, it was smaller than the 14.2m gain foreshadowed in analogous API data.

Another quiet day on the economic data docket puts Fed-speak in the spotlight. Comments from St. Louis and Chicago Fed Presidents James Bullard and Charles Evans are on tap. Commodities may extend gains if lingering fiscal policy uncertainty appears to have undermined officials’ appetite for rate hikes.

GOLD TECHNICAL ANALYSIS – Gold prices resumed their upward march after a brief respite, hitting the highest level in three months. Near-term resistance remains at 1240.88, the 61.8% Fibonacci expansion, with daily close above that exposing the 76.4% level at 1255.08. Alternatively, a move back below the 50% Fib at 1229.40 targets the 38.2% expansion at 1217.91.

Chart created using TradingView

CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices rebounded from support at a rising trend line that has limited downside moves for the past two months. From here, a break back above support-turned-resistance at 52.44 opens the door for a test of now-familiar range resistance at 53.86. Alternatively, a push below the trend line – now at 51.64 – targets the 38.2% Fibonacci retracement at 50.25.

Chart created using TradingView