Crude oil prices fell following Wednesday’s Fed-linked rally after the Trump administration slapped China with punitive tariffs, triggering broad-based risk aversion (as expected).The S&P 500 stock index – a benchmark for broad-based market sentiment – suffered the largest drop in nearly two months.

Gold prices also retreated as the dour mood stoked haven demand for the US Dollar, undermining anti-fiat alternatives. The move lower was relatively tame however as the risk-off mood led capital flows toward the safety of Treasury bonds, weighing on yields and boosting the appeal of non-interest-bearing assets.

Commodities were then jolted higher in early Asia Pacific trade on news that US National Security Advisor H.R. McMaster has resigned. Mr Trump plans to replace him with the substantially more hawkish John Bolton, a former ambassador to the United Nations.

Mr Bolton has advocated pre-emptive military action against Iran and North Korea. The threat of follow-through on the former probably stoked fears about crude supply disruption while the broadly greater chance of a bellicose US likely warned of overall market instability, tarnishing paper assets and lifting gold.

Asia Pacific shares are suffering aggressive losses while FTSE 100 and S&P 500 futures are pointing decidedly lower, hinting that the risk-off mood is set to carry through into the week-end. A lull in top-tier scheduled event risk may inspire traders to avoid weekend risk, encouraging liquidation.

News of exemptions from US steel and aluminum tariffs for the EU, Australia, South Korea and Brazil may help calm things down a bit. The Senate’s passage of the $1.3 trillion spending bill may also assist, but probably not decisively so.

GOLD TECHNICAL ANALYSIS

Gold prices are attempting to breach resistance marked by the 23.6% Fibonacci expansion at 1333.51. Confirmation on a daily closing basis exposes the 38.2% level at 1352.40the first major layer of support comes in at 1307.25, the bottom of a range prevailing since early February.