GOLD & CRUDE OIL TALKING POINTS:
- Gold prices flirting with breakdown as risk aversion boosts US Dollar[1][2]
- Down move in bond yields limiting gold weakness, but not offsetting it
- Crude oil prices[3] may resume decline as UK, US markets return online
Gold prices were torn between conflicting cues at the start of the trading week as worries about political instability in Italy crushed risk appetite and sent the US Dollar higher alongside Treasury bonds, pushing yields lower. The greenback’s gains weighed on the anti-fiat yellow metal but the accompanying drop in yields spoke to its appeal as a non-interest-bearing alternative, capping losses.
Asia Pacific bourses celebrated[4] after President Mattarella vetoed the nomination of a eurosceptic to lead the Economy Ministry but Europe was clearly of another mind. The spread between Italian and German bond yields – a measure of the extra risk in lending to Rome versus Berlin – jumped to a four-year high as regional markets came online, with the risk-off mood then spreading across the asset spectrum.
Crude oil edged lower early Monday as APAC markets took their turn pricing in Friday’s fireworks[5] but market closures in the UK and the US cut off subsequent follow-through. That left the Brent and WTI benchmarks to linger in consolidation mode through the rest of the day. Tropical storm Alberto – the first of the season – had a seemingly negligible impact on oil infrastructure in the Gulf of Mexico.
COMMODITIES MAY EXTEND DROP IN RISK-OFF TRADE
Looking ahead, US consumer confidence data headlines an otherwise tepid data docket. A slight downtick is expected,
