Gold Prices May Continue Higher As German Coalition Crumbles

Gold prices pushed higher Friday – posting the largest daily gain in nearly three months – as risk aversion weighed on bond yields and cooled Fed rate hike bets. That offered a familiar boost to anti-fiat and non-interest-bearing assets epitomized by the yellow metal. Sentiment soured after Special Counsel Robert Mueller subpoenaed the Trump campaign.

Crude oil prices turned sharply higher after Saudi Energy Minister Khalid Al-Falih said the recent political shakeup in the kingdom will not affect its commitment to OPEC-led production cuts and argued that the cartel should extend the scheme at this week’s meeting. He added that Russia will be “fully on board” with the extension, pushing back against concerns about Moscow’s reticence.

Looking ahead, gold may continue to find support in risk-off trade. The breakdown in German coalition talks have emerged as the culprit this time around, with FTSE 100 and S&P 500 futures pointing to a gloomy day ahead. In the meantime, crude oil may capitalize on a lull in top-tier news flow to consolidate. The expiry of the active WTI contract may translate into some volatility, however.

GOLD TECHNICAL ANALYSIS – Gold prices jumped higher to test resistance at 1297.74, the 38.2% Fibonacci retracement. A daily close above that exposes the 1306.04-9.15 area (October 16 high, 50% level).Alternatively, a push through support at 1269.10 (trend line, 38.2% Fib expansion) opens the door for a test of the 1257.69-60.80 zone (October 6 low, 50% expansion).

CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices bounced after a sharp move lower stalled near the $55/bbl figure. A daily close above support-turned-resistance at 56.82 exposes the 57.72-92 area (23.6% Fibonacci expansion, November 8 high. Alternatively, a move below the 23.6% Fib retracement at 55.01 targets the 38.2% threshold at 53.21.