Crude Oil Prices May Turn Lower as Market Mood Sours Anew

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CRUDE OIL & GOLD TALKING POINTS:

  • Crude oil prices rise with stocks amid broad risk-on recovery
  • Gold prices drop as Treasury bond yields, US Dollar advance
  • S&P 500 futures flash red, US consumer confidence data due

Crude oil prices rebounded alongside stocks amid a broad-based recovery in risk-geared assets. Absent a clear improvement in the macro backdrop – a partial shutdown of the US government persists, a viable Brexit deal remains elusive, the outlook for global growth remains worrying – the move seems corrective after last week’s dramatic bloodletting.

Gold prices spiked briefly higher but soon erased those gains to finish Wednesday’s session with a loss. The rebound in sentiment translated into higher Treasury bond yields and a steepening of the priced-in 2019 Fed interest rate hike cycle. That helped the US Dollar higher. Not surprisingly, all this translated into diminished demand for non-interest-bearing and anti-fiat assets epitomized by the yellow metal.

CRUDE OIL MAY RETREAT AS MARKET MOOD SOURS ANEW

From here, the pendulum may swing back toward the risk-off side of the sentiment spectrum as corrective flows ebb and familiar worries recapture the spotlight. In fact, S&P 500 futures already point tellingly lower. US Consumer Confidence data amounts to the only noteworthy bit on the economic calendar. Expectations call for the second consecutive decline to produce the lowest reading in five months.

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

GOLD TECHNICAL ANALYSIS

Gold prices are eyeing resistance in the 1282.27-88.85 area after spiking to the highest level in six months. Negative RSI divergence warns that bullish momentum may be ebbing however, which might precede a reversal downward. A move back below the 1257.60-66.44 zone targets rising trend line support set from mid-November, now at 1245.05. Alternatively, a daily close above resistance sees the next upside barrier in the 1302.97-07.32 region.

Crude Oil Prices May Turn Lower as Market Mood Sours Anew

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices staged a spirited recovery from support in the 42.05-55 area, but the steep downward trend started in early October remains intact. A daily back above the November 29 low at 49.41 would neutralize immediate downside pressure and open the door for a retest of the 54.51-55.24 zone. Alternatively, drop through 42.05 exposes the August 2016 low at 39.19.

Crude Oil Prices May Turn Lower as Market Mood Sours Anew

COMMODITY TRADING RESOURCES

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