Talking Points:
- Gold prices remain range-bound as markets await US CPI figures
- Crude oil prices probe upward as risk trends shrug off China data
- Corrective and pre-positioning flows set to define near-term trade
Crude oil prices are on the upswing to start the trading week as markets shrug off initial negativity in the wake of soft data from China reported over the weekend. The WTI contract was off to a quiet start initially as Asian markets came online but upward momentum swelled alongside a strong push higher from Hong Kong and Shanghai shares at the opening bell.
Meanwhile, gold prices may find a near-term lead amid pre-positioning for Tuesday’s release of April’s US CPI figures. The report is expected to show the spread between headline and core CPI hit a three-month low, which may lay the groundwork for a Fed rate hike. The US Dollar hit a two-month high late last week however and a degree of retracement ahead of the inflation report may see it trading lower, boosting the yellow metal in the process.
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GOLD TECHNICAL ANALYSIS – Gold prices remain confined in familiar territory as markets await a clear-cut catalyst to spark directional momentum. Near-term support is at 1261.70, the 23.6%Fibonacci expansion, with a break below that on a daily closing basis exposing the bottom of a rising channel at 1233.63. Alternatively, a push above resistance in the 1294.26-1307.49 area (January 22 2015 high, 38.2% level) targets the 50% Fib at 1324.58.
CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices continue to test resistance in the 46.76-47.41 area marked by the April 29 high and the 38.2% Fibonacci expansion. A daily close above this barrier exposes the 50% level at 48.77. Alternatively, a reversal below the 23.6% Fib at 45.73 targets the 14.6% expansion at 44.69. Early signs of negative RSI divergence keep alive the possibility of a double top in the works.
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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