Weekly data: Oil and Gold
This preview of weekly data looks at USOIL and XAUUSD where economic data coming up later this week are the main drivers in the markets for the near short term outlook.
The most important economic data for this week are:
- US GDP growth at 13:30 GMT. The market consensus is that the figure will be increased by 2.9% for the third quarter. This might not have a major effect on the dollar since it is just a second estimate but it could hint that the official GDP rate might be increased for the quarter and that the greenback might be up for a bullish move once the official rate is released.
- NBS manufacturing PMI at 01:30 AM GMT where the expectations are for a slight increase reaching 49.8 points. The NBS is larger than the Caixin (to be released later this week) and is focusing more on larger state-owned firms. If the expectations are correct then it would mean that the state owned firms might be performing slightly better but have yet to reach the 50 point level indicating that the manufacturing sector of the NBS survey might still be shrinking and probably might have some effect on production related products like oil, natural gas, silver etc.
- European flash inflation rate at 10:00 AM GMT where the figure for the month of November is expected to drop from 2.9% to 2.8%. This might not have a significant effect on the Euro first because of the very minor change and also because it is flash data meaning that it’s not the final official rate.
- US core PCE expected to be released at 13:30 GMT is anticipated to drop by 0.1% for the month of October. The PCE index shows the changes in the price of goods and services bought by consumers for consumption and it excludes food and energy. The PCE reading is one of the vital components taken into account by the Federal reserve when deciding on their monetary policy and a slow down of the Index reading could probably influence a more dovish stance on the Fed next meeting.
- Caixin Manufacturing PMI at 01:40 AM GMT. The figure for the month of November is expected to increase by 0.2 points reaching 49.7. Caixin PMI is more focused on the export sector and small and midsize enterprises (SMEs) and a reading of anything below the 50 point mark would indicate that these companies have yet to recover fully which could result in affecting the prices of various manufacturing related instruments.
- US manufacturing PMI at 15:00 GMT. The consensus is for an increase from 46.7 to 47.6 points. Even though the expectations are for an improved image of the manufacturing sector in the U.S it is still below the 50 point mark suggesting that the manufacturing sector is still struggling to improve.
Oil prices fell for the fourth consecutive day as traders awaited the delayed OPEC+ meeting and global markets turned risk-off. The decline in oil prices was influenced by weak industrial profit growth in China as well as disagreements among OPEC members regarding production quotas which have put pressure on the market. The key question is whether Saudi Arabia will continue its voluntary supply cuts of 1 million barrels per day (bpd) into next year while some analysts expect Saudi Arabia to roll over the cuts and there is a possibility of deeper cuts from the broader group. OPEC+ will need to demonstrate supply discipline to ease concerns of a surplus in oil markets next year which could potentially result in massive price drops.
On the technical side the price has resumed its overall bearish momentum after finding sufficient resistance on the 61.8% of the weekly Fibonacci retracement level. The Stochastic oscillator is approaching the extreme oversold area but at the same time the 50 day moving average crossed below the 100 day moving average indicating that the bearish trend is still in effect. If the price continues its current direction to the down side then the first point of technical support could be laying around the $72 price area which consists of the lower band of the Bollinger bands as well as the 78.6% of the weekly Fibonacci retracement level.
Gold prices reached a six-month high due to a weaker U.S. dollar and expectations that the Federal Reserve will not raise interest rates. The focus now shifts to U.S. data later in the week since it is highly probable to affect the gold prices. The lower U.S. dollar is driving the increase in gold prices, and upcoming economic figures will determine whether gold remains above $2,000. Traders expect the Fed to keep rates unchanged in December, with an over 40% chance of a rate cut in May next year according to the Fedwatch tool.
From the technical point of view gold price is currently trading just below the major technical resistance area of $2,020 which consists of the upper band of the Bollinger bands and the 78.6% of the weekly Fibonacci retracement level. The Stochastic oscillator is in the extreme overbought level while the 50 and 100 day moving averages are trading closely meaning that there is a probability of a correction to the downside in the near short term. The price is trading above all technical indicators which might be a sign of excessive bullish activity and it could potentially correct in the coming sessions. If this scenario is confirmed and the price makes a bearish move then the first area of possible support might be found around $1,975 price area which is made up of the psychological support of the round number, the 20 day moving average line and the 61.8% of the weekly Fibonacci retracement level.
Disclaimer: the opinions in this article are personal to the writer and do not reflect those of Exness or Finance Feeds.