Crude Oil Prices May Rise While Gold Falls As Markets Consolidate

Crude oil prices continued to sink, driven lower by lingering worries about oversupply as demand softens alongside global growth while US output continues to hover near record levels. Reports saying that Iranian Foreign Minister Javad Zarif offered the US a deal to whereby Tehran would permanently accept enhanced nuclear program in exchange for the lifting of all sanctions probably helped as well.

Gold prices shot higher as New York Fed President John Williams treated investors to another round of dovish pronouncements on the direction of monetary policy. Yields fell alongside the US Dollar. The markets now see an almost even chance that the US central bank will deliver 50bps in stimulus rather than the customary 25bps after the next meeting of the rate-setting FOMC committee on July 31.

CRUDE OIL, GOLD PRICES MAY RETRACE RECENT MOVES INTO THE WEEK-END

The University of Michigan gauge of US consumer confidence headlines a quiet data docket in the final hours of the trading week. US economic data has tended to undershoot baseline forecasts recently, warning that expectations for a modest uptick may be disappointed. It seems unlikely that this has scope to drive much more of a dovish shift in already stretched Fed stimulus bets, however.

This might leave room for sentiment trends to dominate price action. Bellwether S&P 500 futures are pointing higher in late Asia Pacific trade, pointing to a risk-on tilt in the prevailing market mood. That might help engineer a corrective uptick for cycle-sensitive crude oil prices. Bond yields might retrace some recent losses as well, echoing as a pullback for gold into the weekly trading close.

GOLD TECHNICAL ANALYSIS

Gold prices shot higher from a choppy congestion range to challenge the 38.2% Fibonacci expansion at 1447.89. A daily close above that exposes the 50% level at 1468.27. Alternatively, a reversal back below the 23.6% Fib at 1422.67 sets the stage to retest a dense support block starting at 1381.91.

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