Crude Oil Prices May Be Topping, Gold Momentum Ebbing

Talking Points:

Commodities remain at the mercy of evolving macro-level narratives. A broad-based slowdown in global economic activity is one such theme. An anti-climactic conclusion to a meeting of G7 finance ministers and central bank governors in Sendai, Japan over the weekend will see the spotlight shift to Eurozone PMI data. This is expected to show the pace of regional manufacturing- and service-sector growth hit a four-month high in May, which may boost sentiment and help lift crude oil prices.

The chipper mood may not prove lasting however as Fed-speak captures the spotlight later in the day. San Francisco and St. Louis Fed Presidents John Williams and James Bullard are on the docket. Another hawkish outing mirroring last week’s saber-rattling may boost bets on a rate hike at the June or July meetings of the rate-setting FOMC committee. This may cap risk-on sentiment as well as undermined anti-fiat demand, punishing gold prices.

FXCM traders are net buyers of gold. Find out what this suggests about the price trend!

GOLD TECHNICAL ANALYSIS – Gold prices declined for a third consecutive day but momentum has notably weakened, with the ATR measure of volatility dropping to the lowest in nearly four months. A break below rising channel support at 1237.20 exposes the exposes the 38.2% Fibonacci retracement at 1205.30. Alternatively, a reversal above the 23.6% Fib expansion at 1261.70targets the 1294.26-1307.49 area (January 22 2015 high, 38.2% expansion).

CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices remain locked in a narrow range below the $49/barrel figure but the appearance of a Shooting Star candlestick coupled with negative RSI divergence warns that a downturn may be ahead. A break below the 38.2% Fibonacci expansion at 47.41 exposes the 23.6% level at 45.73. Alternatively, a daily close above the 50% Fib at 48.77 sees the next upside barrier at 50.13, the 61.8% expansion.