DailyFX.com -

Talking Points:

• Crude oil prices stall as markets weigh conflicting supply trends

• Gold prices hit 3-month high as markets sour on “Trump trade”

• Commodities may lack drivers for near-term trend development

Crude oil prices have stalled anew as traders weigh conflicting supply trends. On one hand, OPEC is pushing for broader implementation of a supply cut deal agreed by the cartel and several large external producers, notably including Russia. On the other, swing output continues to swell, with Baker Hughes data showing the number of active US rigs rose to the highest since October 2015 last week.

Significant progress on this narrative seems unlikely over the coming day. Markets may have to wait until Tuesday to see the next significant catalyst for trend development. The EIA monthly report and the weekly API inventory flow data are due to cross the wires.

Gold prices continued to push higher as the US Dollar swooned alongside benchmark Treasury bond yields and the priced-in rate hike path implied in Fed Funds futures flattened. Not surprisingly, this bolstered the relative appeal of non-interest-bearing and anti-fiat assets including the yellow metal.

The move may reflect ebbing confidence in the so-called “Trump trade” after Treasury Secretary Mnuchin said the impact of the administration’s expansionary economic plan is unlikely to be seen in 2017. From here, upcoming remarks from Dallas Fed President Kaplan, hawkish though they may be, are likely to be overshadowed by fiscal concerns before a much-anticipated speech from President Trump.

What does retail traders’ gold positioning say about the price trend? Find out here!

GOLD TECHNICAL ANALYSIS – Gold prices rose to the highest level in over three months. From here, a daily close above the 38.2% Fibonacci expansion at 1263.15 opens the door for a test of the 50% level at 1277.53. Alternatively, a turn back below the 23.6% Fib at 1245.35 targets rising trend line support at 1237.75.

Chart created using TradingView

CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices are digesting gains after completing a Triangle chart pattern. The setup has bullish implications in the context of the up move preceding it. Near-term resistance is in the 55.21-65 area (January 3 high, 38.2% Fibonacci expansion), with a daily close above that targeting the 50% level at 57.18. Alternatively, a reversal below Triangle top resistance-turned-support at 53.67 exposes a rising trend line doubling as the Triangle floor, now at 52.20.

Chart created using TradingView

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