Market Analysis: Oil & Gold
Gold prices slightly declined as the dollar strengthened and investors assessed the possibility of interest rate hikes, while technical analysis suggests a sideways trading pattern and resistance at the 100-day moving average.
Crude Oil (USOIL)
Oil prices fell on Monday as concerns over China’s economy overshadowed OPEC+ output cuts and the seventh straight drop in the number of oil and gas rigs operating in the United States. Brent crude fell by 0.6% to $76.13 a barrel while US West Texas Intermediate crude was down 0.7% to $71.29. A number of large banks have cut their forecasts for China’s 2023 growth in gross domestic product after data last week showed the post-COVID recovery in the world’s second-largest economy was faltering.
‘ U.S energy firms cut down the number of working oil rigs for the seventh consecutive week for the first time since July 2020 while OPEC agrees on a new oil output deal. Saudi Arabia , the group’s biggest producer, also pledged to make a big output cut in July which could further support the price of the “black gold”. Overall the sentiment of the traders is fairly bearish at least in the short term.’ said Antreas Themistokleous, market analyst in Exness.
On the technical point of view the price is currently facing resistance of the 50 day moving average while still moving in a kind of sideways channel. The Bollinger bands are somewhat expanded indicating volatility in the market while the Stochastic oscillator is not recording any overbought or oversold levels although it is currently in the direction of crossing to the overbought area.
All in all the level of $75 is considered a strong technical resistance area on the chart since it consists of the 78.6% of the daily Fibonacci retracement level, the upper band of the Bollinger bands and also the 100 simple moving average.
Gold (XAUUSD)
Gold prices fell slightly on Monday as the dollar strengthened, with investors assessing the path for interest rates after hawkish remarks from US Federal Reserve policymakers. Spot gold was down by 0.1% to $1,955.79 per ounce, while Fed officials struck a hawkish tone in their first comments since holding the policy interest rate steady at their meeting last week.
‘ After the pausing of hiking the interest rates by the FED last week traders are now pricing in an about 75% chance of a rate hike in July, according to the CME Fedwatch tool. This however will go through big fluctuations especially due to anticipation of the speech of the chairman Jerome Powell on the 28th of June and also key economic data like the PCE on the 30th. ’ says Antreas Themistokleous, market analyst in Exness.
According to technical analysis we see that the price is trading in a sideways formation channel for the last month especially because of anticipation by the traders of major events. Trading was also thinner on Monday because of the US Juneteenth holiday.
The price found sufficient resistance on the 100 day moving average on Monday that contributed to the decline seen on the price of the yellow metal. The Stochastic oscillator is in neutral levels not indicating any extremes while the Bollinger Bands have somewhat contracted after the massive volume seen in the previous month.
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