Gold prices attempted a short-lived recovery but failed to sustain momentum yesterday. The metal probed higher as a reserved tone from the Fed cooled hawkish exuberance, as expected. A reversal wasn’t far behind however as traders digested language signaling greater scope for tightening beyond 2018. That steepened the yield curve and sent the US Dollar higher, tarnishing the appeal of anti-fiat alternatives.

Crude oil prices reflected Fed-inspired volatility as well, mirroring moves in gold and the S&P 500. The stock benchmark also popped higher only to swiftly retreat after the FOMC announcement as worries about hawkish overreach hurt sentiment. The magnitude of price swings in the WTI contract was conspicuously more restrained however, with no headway made beyond familiar territory at day’s end.

The muted response might reflect traders’ unwillingness to commit as conflicting asset-specific factors cloud the outlook. On one hand, the possibility that the US may re-impose crippling sanctions on Iran has exerted upward pressure. On the other, swelling inventories are an anchor. EIA reported that US stockpiles unexpectedly added a hefty 6.22 million barrels last week, the most in three months.

SERVICES ISM DATA MAY HURT COMMODITIES

From here, April’s service-sector ISM survey is in focus. An upside surprise echoing recently upbeat US news flow might give the greenback another upward nudge at the expense of commodities. Crude oil may opt against full-scale participation once again however, waiting for fresh news flow to break the deadlock in supply trend speculation.

GOLD TECHNICAL ANALYSIS

Gold prices are probing above support-turned-resistance in the 1307.63-08.65 area (3-month range floor, 23.6% Fibonacci expansion) anew. Beyond that, buyers are faced having to retest a recently broken Triangle pattern floor at 1316.54 and a chart inflection point at 1323.60. Alternatively, downside resumption sees the next major support in the 1273.14-82.02 area (38.2% level, trend line form December 2016).