Gold prices turned sharply lower as the US Dollar returned to the offensive, undermining the appeal of the standby anti-fiat alternative. The move probably reflects pre-positioning ahead of the upcoming release of minutes from January’s FOMC meeting.

Rhetoric suggesting policymakers are turning more confident in firming inflation might rekindle fears of a more aggressive tightening cycle than what investors have accounted for. That is likely to give the greenback another upward nudge while the yellow metal declines further.

Needless to say, a familiarly cautious posture may have a similar impact to last week’s underwhelming CPI release. “Gradual” stimulus withdrawal – which by the Fed’s latest estimation means three hikes in 2018 – is arguably priced in. Officials would need to sound meaningfully more assertive to change that baseline.

Crude oil prices fell with Fed-inspired moves. Denomination in terms of USD on global markets translated into de-facto selling pressure. That was compounded by risk aversion, with the sentiment-sensitive WTI contract following the S&P 500 equities benchmark downward.

Besides the Minutes, the API estimate of weekly US inventory flows is of note. The outcome will be judged against forecasts calling for a 2.31 million barrel build in crude storage and a 1.01 million barrel inflow into gasoline stockpiles to be reported in official EIA statistics on the following day.

GOLD TECHNICAL ANALYSIS

Gold prices suffered the largest loss in two months, with support in the 1312.36-16.50 area (38.2% Fib retracement, support shelf) now back in the cross hairs. A daily close below that exposes the 50% level at 1301.19. Alternatively, a push above the 38.2% Fibonacci expansion at 1356.23 opens the door for a challenge of the 1366.06-71.50 zone (January 25 high, 50% expansion).

CRUDE OIL TECHNICAL ANALYSIS