Gold Prices May Break Out as US GDP Data Shapes Fed Outlook

GOLD & CRUDE OIL TALKING POINTS:

• Gold prices coiling up for breakout below $1300/oz figure

• Crude oil prices erase intraday fall as EU, US spar on Iran

• US GDP revision, EIA inventory flow data in focus ahead

Gold prices probed higher as trade war worries weighed on risk appetite and sank bond yields, boosting the appeal of non-interest-bearing alternatives. The move fizzled intraday however, with the metal crumbling to close within a hair of the session open as haven demand buoyed the US Dollar, sapping anti-fiat demand.

Cycle-sensitive crude oil prices traded lower alongside stocks for most of the day but found fuel for a sharp recovery into the close. The US warned the EU that Instex, its scheme to bypass anti-Iran sanctions, may face penalties. A late-day sentiment recovery after an eye-catching US bond sale seemed to help as well.

GOLD PRICES LOOK TO US GDP DOWNGRADE FOR SUPPORT, CRUDE OIL MAY FALL

All eyes now turn to a revised set of first-quarter US GDP data. A downgrade from 3.2 to 3.0 percent on the annualized growth rate is expected. A disappointment might be in the works, which could spark another round of anti-risk liquidation across global financial markets.

Gold may rise if such an outcome stokes Fed rate cut bets that weigh on the Greenback, echoing last weeks response to downbeat PMI and durables data. However, gains may be scuttled if the sentiment downturn is potent enough to sustain a liquidity-seeking haven bid for the benchmark currency.

As for oil, it is likely to follow shares downward in a risk-off scenario. Losses could be capped if EIA inventory data – expected to show a 1.05-million-barrel outflow – hew closer to leading figures form API showing US stockpiles shed a heftier 5.27 million barrels last week.

GOLD TECHNICAL ANALYSIS

Gold prices are coiling up between falling trend resistance from late February (1294.56) and upward-sloping support dating back to mid-August 2018 (1273.37). A break upward confirmed on a daily closing basis initially targets the 1303.70-09.12 area. Alternatively, clearing support exposes the 1260.80-63.76 zone.

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices continue to mark time near support in the 57.24-88 area. Breaking below it on a daily closing basis exposes the 55.37-75 zone next. Alternatively, a reversal back above support-turned-resistance in the 60.39-95 region opens the door for a challenge of the 63.59-64.43 price band.

COMMODITY TRADING RESOURCES

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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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