Weekly data: Price action on Gold and Oil following last week’s US job report

This article was submitted by Antreas Themistokleous, market analyst at Exness.

This preview of weekly data looks at USOIL and XAUUSD which are both making some gains in the last week. Gold is trading above its Bollinger bands indicating great volatility in the market while oil is still going strong in its bullish momentum for six out of the last seven sessions.

This week the important publications include the US non-manufacturing PMI which is expected to be more than 50 indicating that the non manufacturing sector of the US economy is growing and might support the buck in the following days.

The Reserve bank of Australia is releasing its monetary policy on Tuesday November 6th at 3:30 AM GMT with market consensus being a single hike on the Aussie dollar. The last 3 times that the RBA increased its interest rates we see that the Australian dollar was supported well at least in the short term so it’s no surprise to witness this support after the publication this time also.

On Wednesday November 7th at 12:30 AM GMT we also have the Australian GDP release with the expectations being more than optimistic with the figure reaching up to 6.3% against a previous release of 3.6%. If this figure is confirmed we might see the Aussie dollar making gains against its pairs.

On the same day at 3 PM GMT we have the Bank of Canada releasing its monetary policy where a double hike is the most possible scenario. If this scenario plays out then we might see some upward movement of the loonie against its pairs especially the US dollar.

Last important news for the week is the Australian Balance Of Trade set to be released on Thursday at 12:30 AM GMT which is expected to have an increased trade surplus further supporting the Australian Dollar.

Gold, daily

Gold prices hit a 5 month high on Monday with the price reaching $1,809.91. Recession fears in the US were lowered for the time being since the US job report got published last Friday and showed that U.S. employers hired more workers than expected in November with the NFP reporting an addition of 263 thousand jobs against market expectations of 200 thousand. Even though the actual figure is less than the previous release it is still a positive figure signaling that the labor market is still keeping strong in the States. The market is also expecting the Federal Reserve to slow their pace on the next FED meeting with 80% expecting a double hike instead of the last triple hike which could potentially provide support for gold.

On technical analysis we can observe that the price is trading in a strong uptrend for the last month. It is trading outside the upper band of the Bollinger bands indicating high volatility while the current trading area is a strong resistance consisting of the round number of $1800 and also the last resistance area of the major swing in mid August.

With the Stochastic indicator in the overbought level we might expect some correction to the downside with some support around the $1770 which is just above the 78.6% of the Fibonacci retracement level.

Oil, daily

In the last week the price of oil has soared in fears that the Russian-Ukrainian war could damage supply. The EU ban on Russian crude oil is also starting to be in effect from the 5th of December while a price cap of $60 per barrel will also apply in the near future from the G7 and Australia. This cap essentially means that only Russian oil that was bought for less than $60 a barrel will be allowed to be shipped using the EU and G7 tankers. Russia replied that it will not accept this cap and threatened to stop exporting oil to all countries that will adopt the price cap.

Being the second top producer of crude oil after Saudi Arabia, Russia can influence the price of the “black gold” greatly and have already diverted their European shipments to China, Turkey and India. OPEC meeting that was held on Sunday December 4th has agreed to stick to their original statement for output cuts that was decided and announced at their last meeting for a deduction of 2 million barrels per day in an effort to influence an increase in the price.

On the technical side the price of oil is currently trading at the $82 area, just above the 38.2% of the daily Fibonacci retracement level. A further continuation to the upside could face some resistance around the $83.300 area which consists of the 50% of the Fibonacci and also an inside resistance area since mid October.

If the price fails to incline further and with Stochastic indicator in the overbought levels we might see some correction to the downside in the following days with the first area of support around the $78.200 area just below the 23.6% of the Fibonacci.

Disclaimer: opinions are personal to the author and do not reflect the opinions of Exness or LeapRate.

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