Gold Prices Buoyed By Falling Yields, Crude Oil Plunges On Viral Concerns

The commodity-linked Australian and Canadian Dollars as well as the Norwegian Krone were weighed by falling crude oil prices, pointing to further strength in the Greenback. Against this backdrop, crude oil may struggle to find its way higher.

The American Petroleum Institute (API) reported a larger-than-expected build in crude oil inventories of 2.927 million barrels for the week ending March 19th. In the prior week, the institute reported a surprising 1 million barrels draw in stockpiles, compared to a baseline forecast of a 2.96 million barrels build.

The EIA crude oil inventory report set to be released on March 24th will also be closely watched by oil traders after four consecutive weeks of stockpile build. Although extreme weather conditions in February have resulted in a temporary disruption in refinery activity, operations have been restored rapidly. According to EIA’s summary of weekly petroleum data, US refiners operated at 76.1% of their capacity during the week ending March 12th, compared to 69% a week ago.

Gold Prices Buoyed by Falling Yields, Crude oil Plunges on Viral Concerns

Source: Bloomberg, DailyFX

Gold Price Technical Analysis

Gold prices have likely reversed higher into a minor “Ascending Channel” as highlighted in the chart below, signaling that near-term trend may have turned bullish. Price hit an immediate resistance level at US$ 1,743 (the 23.6% Fibonacci retracement) and has pulled back since. The MACD indicator is trending up higher after the formation of a bullish crossover, underpinning upward momentum.

The primary trend remains bearish-biased however, as suggested by the downward-sloped 50- and 100-day SMA lines, although the 20-day SMA seems to be flattening.

Gold Price – Daily Chart

(Click on image to enlarge)


Crude Oil Price Technical Analysis

Crude oil prices failed to breach the 200% Fibonacci extension level (66.50) and has since entered a technical correction. Prices registered two long-rang bearish candlesticks over the last four trading sessions, pointing to strong selling pressure. The 10-day SMA line crossed below the 20-day line for the first time since November, signaling that the overall trend has likely reversed downward. An immediate support level can be found at the 55.22 (the 100% Fibonacci extension) whereas an immediate resistance can be seen at the 161.8% Fibonacci extension (62.19). The MACD indicator formed a bearish crossover and plunged sharply, suggesting that bearish momentum is dominating.

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