Weekly data: Oil and Gold

The most important economic data for this week are:

Thursday:

• Australian Balance of trade at 12:30 AM GMT where the expectations are for an increase reaching A$7.5 Billion in trade surplus. This might not have a significant effect on the Aussie Dollar since the data are for the month of November and might already have been priced in but in case of any major surprise then volatility might spike temporarily
• US Inflation rate at 13:30 GMT where the consensus is for an increase of around 0.1% reaching 3.2% for the month of December. If this is broadly accurate then it might not influence a change in the stance of the Federal Reserve on their next meeting where the probability for now is that they will keep the rates stable. If there is any significant surprise change on the actual figure then it will respectively affect the dollar in the short term.

Friday:

• Chinese Balance of trade at 03:00 AM GMT where the figure for the month of December is expected to increase from $39 Billion to $76 Billion. If this is broadly accurate then it might create some gains for the currency.
• British GDP growth at 07:00 AM GMT. The market consensus is that the figure will be increased from -0.3% to 0.2% month over month.  This might not have a major effect on the dollar since it is for the month of November however it would provide some hints on the overall economic performance of the British economy.
• US Producers Price Index (PPI) at 13:30 GMT. Market participants are expecting the figure to come out at 1.3% over 0.9% of the previous reading. If this is confirmed then it could potentially hint to potential higher inflation figures in the coming months since higher producers’ costs usually roll down to consumers pushing inflation figures to the upside.

US Oil, daily

Oil prices fell on Monday due to price cuts by Saudi Arabia and an increase in OPEC output. Saudi Arabia’s decision to cut the February official selling price (OSP) of its flagship Arab Light crude to Asia, along with rising supply and competition with rival producers, contributed to the drop in prices. However, concerns about escalating geopolitical tension in the Middle East provided some support to oil prices. The OPEC output rose by 70,000 barrels per day in December, offsetting the upward pressure on prices. Additionally, the US saw a slight increase in oil drilling rigs reaching 501 rigs last week.

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On the technical side the price has found sufficient resistance exactly on the 23.6% of the daily Fibonacci retracement level and has been unable to break above it for the last 3 consecutive sessions. The area of $74 is a rather strong technical resistance level since it also consists of the 50-day moving average. The Bollinger bands have contracted indicating that volatility is thin in the crude oil market while at the same time the Stochastic oscillator is not indicating any extreme overbought or oversold levels hinting that the short term direction of the price might head either way.

Gold-dollar, daily

Gold prices are also dropping due to the loosening of aggressive policy from the Federal Reserve. The US’s strong monthly employment report has, in turn, produced a more comforting investor sentiment, leading to a higher US Treasury bond yield and stronger US dollar positioning. Although, the market still predicts interest rate cuts to fall in March of this year, with the hopes that the Fed will introduce multiple cuts throughout 2024. This will positively affect gold prices, as could the upcoming US consumer inflation figures.

From the technical point of view, gold price is currently trading at just above the major support area of $2,017 price level, which combines the 50-day moving average, the 38.2% of the weekly Fibonacci retracement level and the lower section of the Bollinger bands. The 50-day moving average is trading above the 100-day moving average. This indicates that the overall bullish momentum is not yet at arm’s length. Similarly, the Stochastic oscillator is in the extreme oversold levels, suggesting that a potential a correction to the upside might be a necessary and realistic move in the near short term outlook.

DISCLAIMER:

The opinions in this article are personal to the writer and do not reflect those of Exness or Leaprate.