Gold prices are treading water after suffering the largest daily drawdown in seven weeks. The slump mirrored a rally in the US Dollar. This seems reasonable enough: not only is the yellow metal denominated in terms of USD, meaning the greenback’s rally inherently weighs on prices, but gold’s role as an alternative store of value to paper currency positions it in opposition to the benchmark fiat asset.

For its part, the US unit traded higher alongside US Treasuries bond prices, pointing to demand for the go-to safe haven asset as the catalyst for the currency’s advance. A flat day on the S&P 500 – a proxy for market-wide sentiment trends – argues against broad-based risk aversion. However, the likewise cycle-sensitivecrude oil prices traced out near-perfect inverse performance to Treasuries, falling the most in a month.

This suggests investors were indeed unnerved, with jitters potentially linked to uncertainly on the heels of an announcement that Saudi Arabia’s long-serving oil minister Ali al-Naimi has been replaced with Aramco Chairman Khalid al-Falih.

The move hardly seems to mark a departure from established policy trends however, with Mr. al-Falih likely to continue Saudi Arabia’s relentless push to maintain market-share with record-level output. Indeed, the WTI contract promptly erased losses in the subsequent session. Perhaps most interestingly, the overall narrative gives lie to the idea that gold necessarily trades as a safe-haven asset.

Looking ahead, the EIA weekly report on US crude oil inventories headlines an otherwise quiet economic calendar. An 80k increase is expected, marking the smallest build in a month. Private-sector estimates from the American Petroleum Institute (API) hinted at accelerating stockpile growth over the same period however, hinting at the possibility of an upside surprise that may weigh on prices.

GOLD TECHNICAL ANALYSIS – Gold prices recoiled from resistance in the 1294.26-1307.49 area, marked by the January 22, 2015 high, the 38.2% Fibonacci expansion and a rising channel top. From here,a daily close below the 23.6% levelat 1261.70 exposeschannel floor support at 1231.54. Alternatively, a push abovethe formidable upsidebarrier targets the 50% Fib at 1324.58.