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GOLD & CRUDE OIL TALKING POINTS:

  • Commodities buoyed as Fed rates outlook cools after US jobs data release
  • Gold prices[1] attempt near-term trend break, crude oil prices pierce range top
  • Fed officials’ hawkish tone may put commodity prices back on the defensive

Gold prices edged higher as the US Dollar[2] retreated while the yield curve flattened after April’s US labor market data crossed the wires. It put the pace of wage of inflation at 2.6 percent on-year, undershooting consensus forecasts. This poured a bit of cold water on worries about an aggressive Fed tightening cycle on the horizon, boosting the relative appeal of non-interest-bearing and anti-fiat assets.

Crude oil prices likewise advanced, rising alongside the bellwether S&P 500[3] stock index as moderation in the Fed policy outlook translated into brightening risk appetite. The greenback’s backslide from intraday highs also helped. Oil is denominated in terms of the benchmark currency on global markets, so weakness there offered a degree of de-facto support.

FED COMMENTS MAY HURT COMMODITY PRICES

Looking ahead, a lull on the top-tier economic data front may put Fed-speak in the spotlight. Comments from Vice Chair Randal Quarles as well as four of the central bank’s regional branch presidents (Barkin, Bostic, Kaplan and Evans) are due to cross the wires.

Rhetoric building on the narrative in last week’s FOMC[4] statement signaling an upshift in the expected pace of tightening beyond 2018 might offer the US Dollar another upward push at the expense of commodity prices. Immediate follow-through may be limited however, with traders reluctant to show directional commitment as

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currensceneFLOGO WHTsquareThough not the oldest form of currency, some form of shell money appears to have been found on almost every continent. The shell most widely used worldwide as currency was the shell of Cypraea moneta, the money cowry.

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