Gold Prices May Rise as Soft US GDP Cools Fed Rate Hike Bets

Talking Points:

  • Gold prices might miscarry as Q1 US GDP news disappoints
  • Crude oil cost drop to 1-month low fails to have staying power
  • EIA supply data, supply count total might equivalent OPEC optimism

Gold prices are adrift in informed territory, mirroring converging in a US Dollar and a priced-in 2017 rate travel trail pragmatic in Fed Funds futures. The spotlight now turns to first-quarter US GDP figures. Consensus forecasts indicate to an annualized benefit of 1 percent, a high slack from a 2.1 percent available in a 3 months by Dec 2016.

A closely-watched foresee of US enlargement from a Atlanta Fed suggests a outcome might be some-more unsatisfactory still. Its GDPNow indication projects opening that is materially worse than even a low finish of marketplace estimates. Meanwhile, information from Citigroup shows US mercantile news-flow underperforming relations to accord bets by a widening domain recently, bolstering a box for a downside surprise.

Soft GDP information might import opposite Fed rate travel bets. While a markets are not severely considering a travel subsequent month, a luck of one in Jun is labelled in during scarcely 70 percent. With confidence in a manly mercantile boost receding, a markets might interpretation that a poignant drop enlargement will check tightening during slightest until a second half of a year, boosting a interest of non-interest-bearing resources including gold.

Crude oil prices sank after news that Libya restarted prolongation during a Shahara field, a country’s largest, and skeleton to move a Waha margin online by mid-June. Losses were ephemeral however as markets weighed adult opposing cues from a International Oil Summit in Paris. OPEC Secretary-General Mohammad Barkindo talked adult bloat on removal inventories and likely a offset marketplace after this year.

Another collection of statistics display a relentless bloat in pitch prolongation might revitalise offered vigour however. Taken together,EIA monthly supply figures and a weekly Baker Hughes supply count report tracking a series of active US descent sites might offer as a manly sign of a cartel’s abating change as pitch prolongation grows.

Will a latest wanton oil and bullion cost moves continue by mid-year? See a forecasts here.

GOLD TECHNICAL ANALYSISGold prices are watchful for uninformed instruction cues carrying slid to a two-week low after commanding nearby a $1300/oz threshold (as expected). From here, a daily tighten next a 14.6% Fibonacci enlargement during 1258.62 targets a 1235.91-41.50 area (October 7 2016 low, 23.6% level). Alternatively, a pull above descending trend line insurgency during 1287.01 exposes a 295.46-1308.00 segment (April 17 high, support-turned-resistance).

Gold Prices May Rise as Soft US GDP Cools Fed Rate Hike Bets

Chart combined regulating TradingView

CRUDE OIL TECHNICAL ANALYSISCrude oil prices dipped to a lowest turn in a month though unsuccessful to secure a mangle next trend line support set from Aug 2016. Confirmation of a crack next a 48.74-85 area (trend line, 61.8% Fibonacci expansion) on a daily shutting basement exposes a 47.08-69 section (March 22 low, 76.4% level). Alternatively, a annulment above a 50% Fib during 49.78 opens a doorway for a retest of 50.71, a 38.2% expansion.

Gold Prices May Rise as Soft US GDP Cools Fed Rate Hike Bets

Chart combined regulating TradingView

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

To accept Ilya’s research directly around email, greatfully SIGN UP HERE

Contact and follow Ilya on Twitter: @IlyaSpivak

About author

Agro Commodity Futures rise sharply.

Agro Commodity Futures rise sharply Agro Commodity Futures rise on lower rainfall production, Food Inflation to Rise sharply. Almost all Agro Commodity Futures traded at the ...