Crude Oil, Gold, Iran, US CPI, Fed, Technical Analysis – Talking Points:
- Crude oil flat despite US lifting sanctions on some Iranian officials
- Gold prices shrugged off eye-popping US inflation data as Fed nears
- WTI eyeing Rising Wedge chart pattern, XAU/USD could rise ahead
Crude oil prices traded little changed over the past 24 hours. This is despite breaking news that the US lifted some sanctions on former Iranian officials. That could help to bring back more supply from the area. This is on top of rising expectations of an Iranian Nuclear Deal, which could compound this impact. WTI, and gold prices, also shrugged off the latest, eye-popping US inflation report.
Core consumer prices, which exclude volatile food and energy costs, rose 3.8% y/y in May, beating the 3.5% consensus. That was the fastest pace of general price growth in the country since 1992. But, the bulk of the gains were derived from used vehicle sales. A shortage of computer chips and rising costs are likely sending consumers chasing after the secondhand car market.
As such, traders shrugged off the report, as anticipated. At the end of the day, the Federal Reserve continues to view near-term rising price pressures as transitory. The next monetary policy announcement is on June 16th. There, the central bank will update its outlook for interest rates down the road. Chair Jerome Powell will also likely be asked about the high CPI data, including better-than-expected average hourly earnings in May.
Gold prices aiming higher as Treasury yields and the US Dollar weakened on Thursday. Most of the key event risk is now past us this week. This could mean a fairly quiet session for oil and gold prices into the weekend. US University of Michigan sentiment is due to cross the wires, but may ultimately struggle to meaningfully adjust Fed tapering bets.
Crude Oil Technical Analysis
WTI crude oil prices appear to be trading within a bearish Rising Wedge chart pattern. A breakout under the floor could open the door to a material turn lower. Such an outcome may place the focus on the 100-day Simple Moving Average (SMA). But, getting there would likely involve taking out the 78.6% Fibonacci extension level at 69.20. This may act as key support in the near-term.
WTI 4-Hour Chart
Gold Technical Analysis
Gold prices are on the verge of closing above near-term falling resistance from late May. A bullish crossover between the 20-day and 50-day SMA is also likely around the corner. The latter could reinstate the upside focus for XAU/USD, which has been prevailing since early April. Further gains would open the door to retesting the May high at 1916.
XAU/USD 4-Hour Chart
–— Written by Daniel Dubrovsky, Strategist for DailyFX.com
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