Market analysis

Week 14 data: oil and gold: price review for the week ahead

By Antreas Themistokleous

02 April 2024

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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. The most important economic data for this week are:

Tuesday:

Preliminary German inflation rate at 12:00 PM GMT. The market consensus for the month of March is for a decline in the figure of around 0.3% reaching 2.2%. If this is broadly accurate then it could most probably influence the European inflation figure on the following day.

US job openings are expected to be released at 14:00 GMT. The expectations are for a decline in the figure of around 123,000 jobs but this might not have a significant effect on the dollar since the data is for the month of February and also all eyes will be focusing on the job report later this week for a more accurate conclusion on the labor market.

Wednesday:

Flash European inflation rate at 09:00 AM GMT. The rate for the month of March is expected to remain static at 2.6%. Any surprise on the figure might spark volatility in the pairs including the Euro, especially around publication time.

US Services PMI at 14:00 GMT for the month of March. The consensus is for a pause on the figure which is currently at 52.6 points. This might be rather bullish news for the Dollar since it would mean that the services sector in the States is still above the 50-point mark meaning that it is expanding for the whole of 2024 so far.

Friday:

Canadian unemployment rate at 12:30 GMT. The market is expecting a slight increase in the figure of around 0.1% for March. This might have a minor negative effect on the loonie if the expectations are confirmed.

US Job report at 12:30 GMT where the non-farm payrolls and unemployment rate are going to be published. The expectation for the NFP is for a decline to reach 200,000 against the previous recording of 275,000. If these expectations are correct, the dollar could move down 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

Crude oil prices edged up 1% on expectations of increased demand from the U.S. and China, along with supply tightening due to OPEC+ output cuts and attacks on Russian refineries. Manufacturing growth in the U.S. and China's first expansion of oil demand in six months are key factors driving the potential for a significant rise in oil prices. The moderation in the PCE price index in the U.S. could keep a June Fed rate cut on the table, potentially boosting economic growth and increasing oil demand. Also, Mexico’s state-controlled oil company, Pemex, plans to halt some crude exports in the next few months which directly affects the supply of oil and eventually offers some extra support to the price.

On the technical side, the price has found sufficient support on the 50% of the weekly Fibonacci retracement level and has moved to the upside since then. Currently, the price is trading between the resistance of the upper band of the Bollinger bands and the support of the 61.8% of the weekly Fibonacci retracement level while at the same time, the Stochastic is in the extreme overbought levels. The 50-day moving average is trading well above the 100-day moving average validating the bullish momentum in the market. In addition, the bullish trendline has yet to be broken further confirming the bullish sentiment for crude oil. With only minor hints of a correction, the most dominant scenario in the short term might be the buying narrative with potential targets around the $85 price area which is the psychological resistance of the round number as well as an area of price reaction since late-October of 2023.

Gold-dollar, daily

Gold prices surged to a record high on growing expectations of a U.S. Federal Reserve interest rate cut in June. The rise in gold prices was tempered by a strengthening dollar and climbing bond yields. Despite the potential for rate cuts, uncertainty remains as Fed officials may not aggressively pursue cuts, leading to possible market reversals. As of 02/04/2024, the probability of a rate cut in June has declined to 56% down from almost 64% of the previous week according to the Fedwatch tool.

From a technical point of view, the price of gold has been making new all-time highs in the past week without any clear sign of slowing down just yet. On the contrary, the current image of the daily chart shows that the price is trading above the upper band of the Bollinger bands for 3 days straight indicating that volatility is picking up once again and might push the price to a new all-time high in the near short term. The faster-moving averages are trading above the slower 100-day moving average validating the bullish momentum while the Stochastic Oscillator is in the extreme overbought levels for the last 4 consecutive days. All of these point to a buying narrative that has no indications of slowing down for the time being.


This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.


Author:

Antreas Themistokleous
Antreas Themistokleous

Antreas Themistokleous is a trading specialist in Exness. He is a Certified Financial Technician since 2018. As a member of the Society of Technical Analysts, Antreas is implementing advanced use of indicators and patterns to conclude in an action plan for different trading strategies.