Crude Oil, Gold, XAU/USD, Wall Street, US GDP, Technical Analysis – Talking Points:
- Crude oil prices unscathed despite Wall Street turmoil
- Falling Treasury yields cooled downside gold potential
- Risk aversion may dominate trade ahead of US GDP
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Despite aggressive risk aversion on Wall Street, sending the S&P 500 to its worst single-day performance in about 3 months, growth-linked crude oil prices were able to get by relatively unscathed. Gold, on the other hand, fared worse off compared to WTI, but not quite to the same extent as equities. Copper futures meanwhile slid 1.71%.
The resilience in WTI might have been as a result of the latest EIA crude inventory report. Stockpiles unexpectedly shrunk 9.9 million barrels last week, the most since July 2020. This decrease in supply helped offset some of the downward pressure energy prices were facing as a result of broad-based risk aversion. This was partly triggered by short squeezes in heavily-sold stocks such as GameStop and AMC.
Anti-fiat gold prices weakened as a strengthening haven-linked US Dollar capitalized on investors fleeing for safety in Treasuries. That in-turn pushed yields lower in government bonds, a dynamic that can at times bode well for XAU/USD. Thus, falling Treasury rates in some ways cooled downside potential for the yellow metal.
Futures tracking Wall Street are in the red heading into the European and North American trading sessions. This poses a risk for WTI prices as the impact of stockpile data wears off. Gold faces an interesting situation because if Treasury yields continue weakening, that may offset some of the downside pressure from a stronger Greenback. All eyes are on US fourth-quarter GDP data due over the remaining 24 hours.
Check out the DailyFX Economic Calendar for updates on US GDP.
Crude Oil Technical Analysis
WTI crude oil prices continue to hover just under highs from February 2020. Oil is pressuring the rising trendline from early November. A break under it would expose the 50-day Simple Moving Average which may reinstate the focus to the upside in the event of a turn lower. Uptrend resumption would on the other hand place the focus on the January 20th, 2020 high.
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WTI Crude Oil Daily Chart
Chart Created Using TradingView
Gold Technical Analysis
Gold prices are attempting to break under the longer-term 200-day SMA. With confirmation, that could spell a rough road ahead for XAU/USD. However, a rising range of support from March 2020 seems to be keeping the focus tilted to the upside – see chart below. A bounce off immediate support (1802 – 1822) may place the focus on the January 20th, 2021 high at 1875.
XAU/USD Daily Chart
Chart Created Using TradingView
–— Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter
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