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CRUDE OIL & GOLD TALKING POINTS:

  • Crude oil prices[1] rise to four-year high on US/China de-escalation
  • Technical setup still hints at topping, API inventory data in focus
  • Gold prices[2] precariously cling to trend support, but for how long?

Crude oil prices rose as the markets’ mood brightened amid signs of de-escalation in US/China trade tensions, as expected[3]. Interestingly, gold prices also rose as the exuberant mood translated into a weaker US Dollar[4]. Commodity-linked and emerging market currencies geared to the global business cycle soared against the greenback, echoing as an overall down move. That understandably lifted the go-to anti-fiat asset.

GOLD MAY RETREAT AS FOMC MINUTES LOOM, OIL EYES API DATA

Looking ahead, investors’ initial exuberance may cool absent specifics of a lasting US/China accord. In turn, this may allow Fed policy speculation to reclaim its perch as the central concern for financial markets before minutes from the May 2 FOMC meeting[5] cross the wires Wednesday. That might discourage overexposure to short-USD positions and send the greenback higher amid profit-taking, pressuring gold prices.

As for crude oil, they will be looking to the weekly APIinventory flow report. The outcome will be judged relative to expectations calling for 2.06 million barrel drawdown to be reported in official EIA statistics due Wednesday. A larger outflow may boost prices while a smaller one – or even a surprise build – might pressure them downward. A resurgent US Dollar is likely to be a headwind either way.

See our quarterly crude oil price forecast[6] to learn what will drive the trend

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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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