Weekly data: Oil and Gold: Price review for the week ahead.

This preview of weekly data looks at USOIL and XAUUSD where economic data coming up later this week are the main market drivers for the near short-term outlook.

Stock,Market,Exchange,Loss,Trading,

Highlights this week: BoC and ECB interest rate decision, Non-farm payrolls and US unemployment

Wednesday:

  • Bank of Canada Interest rate decision at 13:45 GMT is expected to decline from 5% to 4.75%. If this is confirmed it would be the first rate cut in more than 2 years of monetary tightening and could potentially create some losses for the loonie against its pairs.
  • US Services PMI at 14:00 GMT for the month of May. The consensus is for an increase from 49.4 points to 50.5. This might be rather bullish news for the Dollar since it would mean that the services sector in the States is expanding given that the actual figure will also be above the 50 point mark.

Thursday:

  • ECB Interest rate decision at 12:15 GMT. The market consensus is that the central bank of Europe will make the first rate cut going from the current 4.5% to 4.25%. If the consensus is confirmed it would mark the first sign of overall European economic improvement. On the other hand, a lower rate would create some minor losses for the Euro against its pairs, mainly the US dollar. Investors and traders are also focused on the subsequent press conference following the release which will be rather insightful on getting hints on the monetary policy steps ahead.

Friday:

  • US Job report at 12:30 GMT where the non farm payrolls and unemployment rate are going to be published. The expectations for the NFP is for an increase to reach 180,000 against the previous recording of 175,000. If these expectations are correct, we might see that the dollar could move up in various pairs in the aftermath of the release. On the other hand the unemployment rate is expected to remain static at 3.9%.

USOIL, daily

Crude oil  graph

OPEC+ has announced a plan to gradually increase oil production starting in October, despite worries about demand and strong supply from non-OPEC+ sources. Despite the extension, oil prices slipped, partly due to the UAE’s increased production quota and market uncertainty. The Saudi Energy Ministry stated that production cuts will persist in the third quarter and then be slowly reduced over the next year.  The decision to delay discussions on production baselines until 2026 reflects a cautious approach amid ongoing demand concerns.

On the technical side, the price has found sufficient support on the lower band of the Bollinger bands after a doji candlestick was formed on the daily chart. The latest sessions might be forming a morning star formation which usually indicates an upward movement. The Stochastic oscillator is in the extreme oversold levels supporting the bullish momentum build-up in the coming days. In addition the faster moving average (50-days) is trading above the 100-day moving average line validating the overall bullish trend. If these indications are correct and the price does indeed move to the upside then the first major technical resistance might be seen around the $80 price area which consists of the upper band of the Bollinger bands, the 100-day moving average as well as the psychological resistance of the round number.

Gold-dollar, daily

Gold vs Dollar Graph

The gold price trades softer around $2,325 as the US PCE price index was not sufficient to prompt a Federal Reserve rate cut, impacting the yellow metal. Meanwhile, the Israeli Prime Minister reluctantly accepted the US President’s plan for a ceasefire in Gaza, adding geopolitical tension. Ongoing Middle East geopolitical tensions could provide support to gold as a traditional safe-haven asset. The US PCE data showed cooled price pressures in April, leading to decreased expectations of a Fed rate cut.

From a technical point of view, the price failed to make a valid break below the 78.6% of the daily Fibonacci retracement level and is currently trading above the psychological support of $2,320. The 20-day moving average is still above the 50-day moving average indicating that the short-term momentum of the trend is still bullish while the Bollinger bands are quite expanded showing that volatility in the market of the yellow metal is still intense. The Stochastic oscillator has been in the extreme oversold area for a prolonged period of time hinting that there might be a correction to the upside in the coming sessions. If this scenario becomes a reality and the price actually moves up then the first area of possible resistance might be seen around the $2,345 which is made up of the 61.8% of the daily Fibonacci retracement level and the 50-day moving average area.

Disclaimer: the opinions in this article are personal to the writer and do not reflect those of Exness or Finance Feeds.

Disclaimer: The subject matter and the content of this article are solely the views of the author. FinanceFeeds does not bear any legal responsibility for the content of this article and they do not reflect the viewpoint of FinanceFeeds or its editorial staff.

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