GOLD & CRUDE OIL TALKING POINTS:
- Gold prices[1] vulnerable as the Fed dials up hawkish rhetoric
- Crude oil prices[2] at risk on USD[3] upswing, EIA inventory data
- Key multi-year chart support levels might finally be broken
Gold prices retreated as the US Dollar[4] posted the largest increase in two weeks, extending its winning streak to a fourth consecutive day and undercutting the appeal of anti-fiat alternatives. An upshift in the priced-in 2019 interest rate hike path implied in Fed Funds futures looks to have accounted for the move. In-line US CPI data passed largely unnoticed, as expected[5].
Crude oil prices edged down as a monthly report from OPEC flagged uncertainly about on-coming supply and demand dynamics while the EIA upgraded its forecast for US output. Meanwhile, unnamed sources claimed Russia wants to scale back production curbs to October 2016 levels. API also reported US inventories added 833k barrels last week.
HAWKISH FED MAY HURT COMMODITY PRICES
Looking ahead, the FOMC[6] monetary policy announcement is firmly in focus. Leading survey data points to a steep pickup in economic activity and accelerating inflation since the March forecast update, which might make for a hawkish tilt. That is likely to bode ill for gold prices as the US Dollar continues to march higher while broader capital flows move away from non-interest-bearing assets.
The official set of EIA inventory flow statistics is also due. It is expected to show that crude stockpiles shed 1.09 million barrels last week. A print closer in line with the API projection might pressure oil prices downward. A stronger greenback
