Crude Oil Prices May Fall with Stocks as Risk Appetite Fizzles

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CRUDE OIL & GOLD TALKING POINTS:

  • Crude oil prices managed to diverge from FOMC-inspired volatility
  • Gold price technical positioning suggests a top may be in the works
  • S&P 500 futures hint at continued risk aversion amid news-flow lull

Crude oil prices were spared breakneck volatility inspired by yesterday’s Fed monetary policy announcement, with prices managing a corrective bounce after three days of aggressive selling. Gold prices were not so lucky, plunging close to 1.2 percent from the intraday high to the post-FOMC low. Chair Powell and company disappointed hopes for a sharp dovish pivot (as expected), undermining anti-fiat demand.

CRUDE OIL AT RISK, GOLD MAY STRUGGLE IN RISK-OFF TRADE

Looking ahead, a lull in high-profile event risk may keep sentiment trends at the forefront. Bellwether S&P 500 futures are pointing convincingly lower to hint that risk-off dynamics have scope for follow-through. That probably means that the path of least resistance points lower for cycle-sensitive oil prices. Gold may struggle for follow-through however, torn between softer yields and a stronger US Dollar.

See our guide to learn about the long-term forces driving crude oil prices!

GOLD TECHNICAL ANALYSIS

Gold prices failed to hold up above resistance marked by the December 10 high at 1250.88, dropping back to the bottom of their recent range. From here, a daily close below support in the 1233.60-41.80 area exposes rising trend line support at 1211.05. Alternatively, a sustained push above 1250.88 sees the next upside barrier in the 1257.60-66.44 zone.

Crude Oil Prices May Fall with Stocks as Risk Appetite Fizzles

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices paused to digest losses after sinking to the lowest level in 16 months. From here, a daily close below the December 18 low at 45.79 opens the door for a test of the 42.05-55 area. Alternatively, a move back above the November 29 low at 49.41 targets trend line support-turned-resistance at 51.60.

Crude Oil Prices May Fall with Stocks as Risk Appetite Fizzles

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