Fed chairman may have to balance his statement once again. As for oil, there was a time when investors were worried about the supply glut but this is no longer the case.
The precious metal is down today for the most obvious which is the strength in the dollar index. Thanks to the bullish statement by the Fed and the press conference further confirmed their stance. However, we think that bulls are still safe and this is because we have not seen the kind of sell-off which could have taken place. This is because a rate hike was a done deal yesterday but the Fed has created some sort of ambiguity in the market yesterday about their future monetary policy. This saved the massive sell-off in the gold price. The Fed balanced their hawkish statement by mentioning that the committee is a little less optimistic about the long-term future outlook and this part alone was enough to keep the dollar index in check.
The next major event which will also be sensitive for the gold traders will be when the Fed Chairman speak (which is later in the day). His speech after the US final GDP q/q data will be an interesting one. We also have the U.S. core Durable good order number coming at 13.30 U.K time and an uptick in this number presents a threat for the gold price. If the GDP shows that the number is higher than the 4.2% (which is the forecast and also the previous reading) it is likely that the Fed chairman may have to balance his statement once again. Hence, we think that gold traders will be staying very much on their toes today.
In terms of technical analysis, we do not any exciting sign, because the price is very much consolidating in a range. The gold price needs to break above the 50-day moving average to convince bulls otherwise the trend will remain skewed to the downside.
Crude
There was a time when investors were worried about the supply glut but this is no longer the case because the only concern among market participant is that there is not enough supply and this is pushing the price higher. Crude is still trading near its 4-year high and given that the U.S has ruled out using the emergency crude reserves, it will continue to support the bull rally for the oil price. Having said this we have seen the crude inventory data (released yesterday) surging for the first time in nearly six weeks but the surge is still not enough to bring the demand in check.
As for Trump, he is still determined to blame the cartel about the increase in the oil price. The speculations are that Trump may use the emergency oil reserve before the mid-term election in November to bring the prices down but remember as we said before that lower oil prices aren’t going to help the U.S shale oil industry which still has significantly higher breakeven relative to the OPEC cartel.
In terms of technical analysis, the relative strength index is confirming that there is enough momentum behind the price and it is likely that the price may break the previous high $75.27. If the 50-day moving average ends crossing the 100-day moving to the upside, this would be a strong bullish signal for the price.
