Gold and Crude Oil Talking Points:
- Gold prices gained even as riskier assets were also in the green
- A global cycle of lower interest rates will offer broad support
- Crude oil markets look to key producer meetings this week
Gold prices were higher in Asian trading Thursday with coronavirus-related worries still boosting all such counter-cyclical haven assets. However, gains were capped by a better tone for riskier markets, notably equity.
US stocks liked a strong performance from former Vice-President Joe Biden in the Democrat nomination battle. He’s seen as the most market-friendly candidate among likely winners. Equity markets were also cheered by the International Monetary Fund making $50 billion available to countries hit by the outbreak, and by expectations that this week’s interest rate cuts from the US, Australia and Canada won’t be the last in a global easing cycle.
Lower borrowing costs and bond yields are also likely to support gold, of course.
Data released on Wednesday showed strong private-sector hiring in the US last month, raising hopes that the world’s largest national economy remains resilient and, again, tempting investors away from haven assets. Further labor market figures are due later in the session, with the curtain raised on what remains the world’s most important single economic release, official US employment figures. They’re coming up on Friday, with a rise of 175,00 non-farm jobs expected.
| Change in | Longs | Shorts | OI |
| Daily | 10% | -1% | 7% |
| Weekly | -2% | -13% | -5% |
Crude oil prices rose on Thursday with production cuts now very much on the markets’ collective mind.
Minister from the Organization of Petroleum Exporting Countries (OPEC) will meet formally in Vienna later, with the ‘OPEC Plus’ group which includes major producer Russia joining them on Friday.
Led by Saudi Arabia OPEC wants support from Moscow for heavy additional production cuts to support prices. The crude oil market has fallen by about 20% this year as the coronavirus casts a cloud over demand forecasts.
As far as is known Russia’s position is that existing reductions should be extended but not increased. Much hinges on this meeting’s outcome then, with oil prices likely to rise further if Saudi Arabia gets its way, or anything like it.
| Change in | Longs | Shorts | OI |
| Daily | 3% | 10% | 4% |
| Weekly | -9% | -2% | -8% |
Gold Technical Analysis
Prices remain caught between two ranges on the daily chart. This week’s surge has seen the former band left behind yet again but hasn’t been enough to see gold break back into the trading band which guards the way back up to February’s eight-year highs.
While it’s by no means certain that the bulls have abandoned their ambitions in this direction, a modest downtrend seems to be forming on the chart which will need a close above $1644.08/ounce to break. It may be a good idea to keep an eye on that level into this week’s end.
Crude Oil Technical Analysis
US crude oil prices have bounced from the lows of late February, but they have hardly done so very convincingly. The overarching downtrend from January remains utterly unthreatened. Of course the fundamentals are very much in charge here. If this week’s meetings end with deeper, longer production cuts then that channel could well see a quick upside break. However, something a little closer to the status quo could see the recent lows revisited at the very least.
Commodity Trading Resources
— Written by David Cottle, DailyFX Research
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