Gold prices capitalized as the US Dollar plunged alongside Treasury bond yields following a somewhat confounding FOMC policy announcement. The central bank projected three rate hikes next year – topping the priced-in view – while upgrading growth and employment forecasts. The outlook for inflation remained steady. That might seem relatively hawkish, but markets clearly thought otherwise.

Looking ahead, rate decisions from the SNB, the BOE and the ECB are on tap. No policy changes are expected but officials’ comments might offer clues on how much stimulus might be rolled back in the coming year. Rhetoric suggesting that the ECB and the BOE, in particular, might be open to tightening faster than currently projected is likely to hurt the yellow metal. That seems unlikely, however, leaving it to consolidate.

Crude oil prices declined, weighed down by another unexpectedly large build in gasoline inventories. The weekly set of EIA statistics showed that storage added 5.66 million barrels, vastly outstripping bets on a 1.79 million increase. As with last week’s release, this weighed heavily on prices despite a drop in crude stocks, perhaps on bets that is only a matter of time before the refined-product glut echoes up the supply chain.

The spotlight now turns to a monthly report from the IEA as well as the proven reserves statistics from the US Department of Energy. The latter report is rather backward-looking, which will probably undermine its ability to move markets. The former might inspire volatility however if the Paris-based agency doesn’t share OPEC’s rosy hopes that still-lingering global oversupply will be “rebalanced” away by late 2018.

GOLD TECHNICAL ANALYSIS – Gold prices are menacing resistance at 1264.92, the 23.6% Fibonacci expansion, after scoring the largest daily gain in a month. A daily close above that exposes the 1277.48-82.61 area (former trendline support, 38.2% level). Alternatively, a move back below the 14.6% Fib at 1254.01 opens the door for a retest of 1236.32, the December 12 low.

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CRUDE OIL TECHNICAL ANALYSIS – Crude oil prices are hovering in digestion mode after an upswing was rejected at former trendline support. A daily close below the 38.2% Fibonacci retracement at 55.04 exposes the 50% level at 54.08. Alternatively, a push above the 23.6% Fib expansion at 59.83 sees the next upside barrier at 62.31, the 38.2% threshold.

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