The price of gold and crude oil is likely to rise with the US closing and blacklisting of the SMIC

Gold, Crude Oil, US Government Shutdown Risk, SMIC Blacklist, Technical Analysis – Talking Points:

  • Gold and crude oil prices rose on Thursday, but their momentum slowed
  • The US government risks closure, dozens of Chinese companies could be blacklisted
  • XAU / USD could extend gains after eliminating the key SMA and WTI resistance

On Thursday, anti-fiat gold prices closed a month high as the decline in the US dollar continued to support precious metal and commodity prices. Most of this performance occurred during Asia Pacific and European trading hours. Hence, momentum in XAU / USD and growth-related crude prices faded during the North American session.

Investors may get tired of US politicians struggling to come to terms with a Covid aid package. Republican Senator John Thune hinted that the government could experience a brief shutdown over the weekend as talks on the package and a financing bill continue. Both should have gone through together. The current interim financing bill, which keeps the government running temporarily, expires at midnight.

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The urgency of a Covid aid package has been made more evident by the latest disappointing jobless claims report. Some profit-taking may also make its way into the financial markets towards the past 24 hours. Crude oil prices aim lower during Friday’s Asia Pacific trading session along with a drop in futures following stocks on Wall Street.

This follows reports that the US is preparing to blacklist dozens of Chinese companies, including SMIC, a major chip maker of the latter. A fall in Treasury yields will likely keep gold afloat despite the strength of the greenback. With that in mind, it could be an unstable session to end the week. This is despite the anticipation that Moderna’s vaccine will be authorized for emergency use, something that is probably already being evaluated by the markets.

Technical analysis of gold

Gold prices closed above 50 days over the medium term Simple moving average (SMA). With confirmation, this may precede an upward push towards a “potential” downtrend line that I highlighted in the chart below. Furthermore, recent price action echoes the bullish implications of a Falling Wedge chart pattern since November. For key support, keep an eye on the 20-day SMA.



of customers are long net.



of customers are short net.

Change in

Longs

Shorts

OI

Daily 0% 12% 3%
weekly -6% 11% -3%

XAU / USD daily chart

The price of gold and crude oil is likely to rise with the US closing and blacklisting of the SMIC

Chart created using TradingView

Technical analysis of crude oil

WTI crude oil prices continue to rise after the bullish implications of a November “golden cross”. Prices are on the peak of the early February turning point at 49.42. A push above this price exposes the February peak at 54.45. Maintaining the bullish momentum could be the moving averages shown in the daily chart below.



of customers are long net.



of customers are short net.

Change in

Longs

Shorts

OI

Daily 7% 0% 3%
weekly -2% 1% -1%

WTI crude oil daily chart

The price of gold and crude oil is likely to rise with the US closing and blacklisting of the SMIC

Chart created using TradingView

— Written by Daniel Dubrovsky, currency analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

https://www.tradingview.com/symbols/USOIL

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