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Crude Oil Rise on US Iran Spat, OPEC Production Cutbacks Hiss



CRUDE OIL & GOLD TALKING POINTS:

  • Crude oil prices rise as Trump threatens Iran OPEC slows production cuts Fed chairman Powell could weigh on commodity prices

Crude oil prices rose at the beginning of the trading week After US President Trump threatened Iran via Twitter and officials in Tehran had warned that if they wished to do so, that would be "the end" of the Islamic Republic. Tensions between the two countries have worsened since the US government tightened sanctions on Iran's oil exports, having withdrawn from an Obama-era nuclear disarmament agreement to extend production cuts by the end of the year. However, Russia ̵

1; the leading non-OPEC manufacturer participating in the program – could have other ideas. His energy minister, Alexander Novak, has reportedly spoken of easing restrictions that expire next month unless they are renewed.

RAW OIL, GOLD PRICES CAN BE SUFFERED AS FED CHAIR POWELL SPEAKS

Moving up might be difficult to assert as risk appetite subsides. Planned comments from Fed Chairman Jerome Powell will launch an otherwise quiet offer on Monday in the Economic Calendar. He is likely to reaffirm the Fed's preference for a wait-and-see approach and destroy traders' hopes of bolstering sentiment in the face of slowing global growth and heightened political uncertainty.

In this scenario, cycle-dependent oil prices should come under lower pressure in addition to inventories. Gold prices could also fall – prolonging a four-day loss period – as the prospect of lowering interest rates boosts yields on US dollar and government bonds. This is a bad sign for a benchmark anti-fiat and non-interest bearing assets. Markets are currently pricing the likelihood of a year-end cut to 73.5 percent.

Did we do it right with our crude oil and gold forecasts? Find out here !

TECHNICAL ANALYSIS TO GOLD

Gold prices fell to test support on a rising trend line, which has been higher since mid-August 2018, now at 1273.01. This is reinforced by the turnaround range of 1260.80-63.76. Falling below the latter threshold exposes the next zone of 1235.11-38.00. The short-term resistance is in the region 1303.70-09.12, followed by a small hurdle in the price range 1323.40-26.30 on the way to the high of February at 1346.75.

  Gold Price Chart - Daily

CRUDE OIL ANALYSIS

Crude oil prices hit the outer layer of a dense resistance block between 63.59 and 67.03. If shoppers succeed in overcoming the limit of this hurdle, a test of $ 70 / barrel may follow. Immediate support is at 60.39, with a reversal below that confirmed on a daily closing basis and paving the way for a challenge in the 57.24-88 range.

  Crude Oil Price Chart - Daily

Commodity Trade Resources

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

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter


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