This article was submitted by Antreas Themistokleous, an analyst at Exness.
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.
Weekly data: Oil and Gold price action before the NFP
The most important economic data for this week are:
- On Tuesday the 22nd until Thursday the 24th there will be the BRICS summit held in Johannesburg, South Africa where the leaders of the countries will meet (except President Putin that will attend virtually due to an arrest warrant issued by the International Criminal Court for alleged war crimes in Ukraine). The agenda will most likely include discussions about BRICS expansion, economic cooperation, BRICS bank etc. All eyes are on the summit to get hints of the action plan of the emerging economies.
- Wednesday 22nd of August at 08:00 AM GMT the EU flash manufacturing and services PMI figures released for August where manufacturing is expected to rise by 0.1 points but still remaining below the 50-level showing contraction of the manufacturing sector while services number is expected to decline to 50.5 against the previous release of 50.9.
- US durable goods on Thursday 23rd of August is expected to drop to -4% against the previous 4.7%.
- On Friday 24th German Ifo Business climate is expected to drop by 0.7 reaching 86.6.
- The FED chair and ECB president will be giving a speech on the 24th of August while from the 24th until the 26th there will be the Jackson Hole Symposium where central bankers will discuss world events and financial trends. The discussions at Jackson Hole are watched for economic news and specifically the likely direction of global interest rates.
US Oil, daily
The recent rally in oil prices was driven by supply curbs from Russia and Saudi Arabia, as well as shrinking US crude stockpiles. The rally in oil prices has also been aided by a stall in the dollar’s rally, making commodities priced in the currency cheaper for buyers. However, there are growing demand risks in China and the US.
Economic data from China, including downbeat consumers and struggling exports, has had an impact on oil prices. Last week, oil fell due to concerns about inflation risks in the US and the smaller-than-expected cut to the benchmark lending rate by Chinese banks. The annual Jackson Hole symposium in Wyoming, featuring speakers such as Federal Reserve Chair Jerome Powell, may provide clues on the direction of interest rates and could potentially have an impact on the short-term outlook for crude oil.
On the technical side the price of crude oil made a valid break above the weekly downward trendline about a month ago and is currently trading just above the 23.6% of the daily Fibonacci retracement level almost exactly on the resistance of the 20-day simple moving average. The 50-day moving average is still trading well above the 100-day moving average indicating that the overall bullish momentum is still in effect while the Stochastic oscillator is back in “neutral” levels after being oversold in last week’s correction move.
In the event that the price continues to make bullish movement we might see a retest of the last high of around $84 which is also the psychological resistance of the round number whilst in the event of a further correction to the downside then it is possible to see some support around the $78 price area which is just above the 38.2% of the daily Fibonacci retracement as well as the lower band of the Bollinger bands.
Gold-dollar, daily
Gold prices held steady above five-month lows of around $1,810 in early March as investors await the central bankers’ gathering in Jackson Hole for insights on the economy and interest rates later this week. Spot gold rose slightly to around $1,894 per ounce, while US gold futures also increased. The focus for this week will be on Federal Reserve Chair Jerome Powell’s speech as central bankers from around the world assemble in Jackson Hole for their annual conference, where discussions on higher long-term interest rates and inflation may impact gold prices. Rising US Treasury bond yields, which reached a yearly high, and China’s smaller-than-expected lending rate cut also influenced market sentiment.
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From the technical point of view gold prices have been trading in a rather aggressive bearish trend for the last month pushing the price of the precious metal below the psychological support of $1,900. The faster moving averages of 20 & 50-days are trading below the slower 100-days moving average confirming the bearish momentum in the market while the Stochastic oscillator is in the extreme oversold levels for at least 2 weeks. In addition, the price has been “walking the band” in the last 10 sessions showing that volatility was also a contributing factor to the steep decline in the price of gold.
All in all, the area of $1,900 is now acting as a psychological resistance of the round number while this area is also the level of the 61.8% of the weekly Fibonacci retracement making it a strong technical resistance point on the chart.
DISCLAIMER
The opinions in this article are personal to the writer and do not reflect those of Exness or LeapRate.
