Gold prices briefly spiked down to a six-week low as Emmanuel Macron triumphed in the second round of the French presidential election. The outcome cheered investors, pushing bond yields briefly higher and weighing on the non-yielding yellow metal by extension.
The move proved short-lived however. Mr Macron bested hard-right rival Marine Le Pen by a margin of 65 to 35 percent, an outcome firmly in line with baseline projections ahead of the vote. That means the outcome did not offer investors anything particularly novel, undercutting follow-through.
Comments from Cleveland and St. Louis Fed Presidents Loretta Mester and James Bullard are now in focus. They may pass quietly however considering the markets’ near-term rates outlook seems to be firmly in place. That may relegate prices to digestion mode (unless an unscheduled catalyst emerges, of course).
Crude oil prices probed down to the lowest level yet this year amid what looked like accelerating liquidation on Friday. The move lost momentum and reversed course intraday however, with the WTI benchmark ending the day with an upside close that snapped a five-session losing streak.
The recovery tracked a rebound in S&P 500 futures, which in turn played out against a backdrop of a firming Euro. This hints that optimism may have reflected expectations of Mr Macron’s win. Needless to say, if this was indeed the lifeline offered to crude oil, it has been spent.
That leaves prices in a precarious position going forward. Baker Hughes rig count data put the number of active extraction sites at a two-year high while CFTC statistics showed net-long exposure to WTI futures has dropped to the lowest in six months.
Tellingly, what seemed like supportive comments from Saudi Energy Minister Khalid Al-Falih failed to excite buyers in Asian trade. This hints that OPEC jawboning about production cuts may have become impotent and warns that liquidation may soon return.
