CRUDE OIL & GOLD TALKING POINTS:
- Crude oil price[1] chart continues to warn of an emerging top
- Monthly IEA report, EIA inventory data may inspire selling
- Gold prices[2] testing critical support after Fed-linked decline
A sharp US Dollar rally[3] weighed on crude oil and gold prices alike. Swelling Fed rate hike bets drove the currency higher alongside front-end bond yields. The spread between rates on two- and ten-year Treasury bond rates tellingly steepened and the 2019 policy path implied in Fed Funds futures reflected a hawkish shift in the markets’ expectations.
The WTI benchmark succumbed to de-facto selling pressure since prices are denominated in USD[4] terms on global markets, but managed to claw back most of the loss to finish the day little-changed. The yellow metal was not so lucky, suffering the largest daily drop in ten months as demand for anti-fiat and non-interest-bearing assets evaporated.
IEA REPORT, EIA INVENTORY DATA, FED-SPEAK
From here, a lull in top tier US news flow might allow for a bit of consolidation in Fed-linked volatility. Scheduled comments from Raphael Bostic and James Bullard – presidents of the US central bank’s Atlanta and St Louis branches, respectively – seem unlikely to be groundbreaking enough to stoke lasting volatility. That might allow gold a bit of a corrective bounce as yesterday’s losses are digested.
Meanwhile, crude oil will turn its attention to a monthly report from the IEA as well as EIA weekly inventory flow data. The former will inform global supply and demand expectations and may help establish the
