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Talking Points:

• Crude oil prices attempt to overturn bearish reversal cues

• Gold prices hit three-week low before momentum fizzles

• Commentary from G7 meeting in focus into the week-end

Crude oil prices recovered yesterday, with the sentiment-linked WTI contract rebounding alongside a rebound on Wall Street. The benchmark S&P 500 stock index plunged to a two-month low but swiftly retraced upward thereafter to close little-changed on the day.

Initial weakness appears to reflect follow-through on yesterday’s Fed-inspired volatility but the absence of fresh news-flow to propel the narrative offered room for a correction. Gold prices were also swept up by corrective flows: prices dropped to a one-month low intraday but erased three quarters of the decline by the close of the session.

Sideline commentary from a meeting of G7 central bank governors and finance ministers in Sendai, Japan will be in focus into the week-end. Countering the slowdown in global economic growth, perhaps by supplementing aggressive monetary easing with fiscal measures, is likely to feature prominently on the agenda. Discussions about FX volatility as well as the looming “Brexit” referendum are also expected.

Risk appetite may firm on rhetoric suggesting fiscal authorities are gearing up to help increasingly stretched central bank efforts to boost output, pushing oil upward alongside share prices. However, measures seen as limiting scope for further monetary easing may undermine anti-fiat demand and weigh on precious metals.

Has crude oil behaved as DailyFX analysts expected in the second quarter? Find out here!

GOLD TECHNICAL ANALYSIS – Gold prices continued to edge lower after clearing range support at 1261.70, the 23.6% Fibonacci expansion, hitting a three-week low. From here, a daily close below a rising channel floor at 1237.63 exposes the 38.2% Fib retracement at 1205.30. Alternatively, a reversal back above 1261.70 targets the 1294.26-1307.49 area (January 22 2015 high, 38.2% level).

CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices are attempting to overturn bearish reversal cues noted yesterday but negative RSI divergence continues to warn of ebbing upside momentum. A daily close above the 50% Fibonacci expansion at 48.77 opens the door for a test of the 61.8% expansion at 50.13. Alternatively, a reversal below the 38.2% Fibat 47.41 exposes the 23.6% level at 45.73.

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

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