Gold Prices Echo Externally Inspired US Dollar Volatility, RBA on Tap

GOLD & CRUDE OIL TALKING POINTS:

• Gold prices echo externally-inspired US Dollar price swings
• Crude oil price rally fizzles as Saudi exports hit one-year high
• RBA may indirectly influence gold as oil eyes EIA, API data

Gold prices declined as the US Dollar returned to the offensive, sapping the appeal of anti-fiat alternatives epitomized by the yellow metal. The greenback rose to the highest level in 13 months against an average of its major counterparts. Meanwhile, a sentiment-driven rally in crude oil prices was aborted as reports of swelling Saudi exports crossed the wires.

RBA IMPACT MAY ECHO IN GOLD PRICES, OIL EYES EIA AND API DATA

Looking ahead, gold prices may continue to reflect externally-driven US Dollar volatility. A lull in top-tier economic news flow might see the benchmark currency reflecting the knock-on effects of price swings in some of its key crosses. Yesterday, that was GBP/USD. Today it might be AUD/USD if that pair turns volatile following the RBA monetary policy announcement.

As for crude, it will size up the EIA Short-Term Energy Outlook report as well as the weekly inventory flow statistics from API. The former will help gauge the extent to which swelling US output can offset reduced supply from Iran, where sanctions are being re-imposed as of today. The latter will be judged against expectations for a 1.79 million barrel outflow to be reported in official DOE figures on Wednesday.

GOLD TECHNICAL ANALYSIS

Gold prices recoiled from trend line resistance, sinking back toward the 17-month low set last week. A move belowthe 38.2% Fibonacci expansion at 1197.94 sees the next downside barrier at 1186.42, the 50% level. Alternatively, a daily close above trend resistance – now at 1212.14 – initially targets former support at 1236.66.

CRUDE OIL TECHNICAL ANALYSIS

Crude oil prices remain locked in a range above trend support set from early February. From here, a daily close above the 23.6% Fibonacci expansion at 70.99 targets the 38.2% level at 73.49. Alternatively, a breach below the outer layer of trend support – now at 66.77 – exposes the 63.96-64.26 area.

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