Technical analysis

Week 2, 2024 data: oil and gold

By Antreas Themistokleous

08 January 2024

exness-oil-gold-1

This article offers a preview of the weekly data for USOIL and XAUUSD. The upcoming economic data later this week are poised to be the main drivers in the markets for the near short-term outlook. The most significant economic data for this week include:

Thursday:

Australian Balance of Trade at 12:30 AM GMT: Expectations are for an increase, reaching a A$7.5 billion trade surplus. Although this might not significantly affect the Aussie Dollar, as the data are for November and could already be priced in, any major surprise may spike volatility temporarily.

US Inflation Rate at 13:30 GMT: The consensus is for an increase of around 0.1%, reaching 3.2% for December. If this proves accurate, it might not influence a change in the Federal Reserve's stance in their next meeting, where the probability for now is that they will keep the rates stable. However, any significant surprise in the actual figure could affect the dollar in the short term.

Friday:

Chinese Balance of Trade at 03:00 AM GMT: The figure for December is expected to increase from $68.39 billion to $76 billion. If accurate, this might create some gains for the currency.

British GDP Growth at 07:00 AM GMT: The market consensus is for an increase from -0.3% to 0.2% month-over-month. This might not have a major effect on the dollar as it is data for November, but it could provide insights into the overall economic performance of the British economy.

U.S. Producers Price Index (PPI) at 13:30 GMT: Market participants expect the figure to be 1.3%, up from 0.9% in the previous reading. If confirmed, this could hint at potentially higher inflation figures in the coming months, as higher producers' costs usually trickle down to consumers, pushing inflation figures upwards.

USOIL, 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, coupled with rising supply and competition with rival producers, contributed to the price drop. However, escalating geopolitical tensions in the Middle East provided some support to oil prices. OPEC output rose by 70,000 barrels per day in December, offsetting upward pressure on prices. Additionally, the U.S. saw a slight increase in oil drilling rigs, reaching 501 rigs last week.

Technically, the price has found resistance exactly at the 23.6% Fibonacci retracement level on the daily chart and has been unable to break above it for the last three consecutive sessions. The area around $74 is a strong technical resistance level, coinciding with the 50-day moving average. The Bollinger Bands have contracted, indicating low volatility in the crude oil market, while the Stochastic oscillator is not showing any extreme overbought or oversold levels, suggesting that the short-term direction of the price could go either way.

Gold-Dollar, Daily:

The price of gold is dropping due to diminished expectations of aggressive policy easing by the Federal Reserve. The strong U.S. monthly employment report has led investors to scale back their expectations, resulting in higher U.S. Treasury bond yields and a stronger dollar. Despite this, markets still anticipate a Fed interest rate cut in March and multiple rate cuts in 2024, limiting the strength of the dollar and providing some support for gold prices. A softer risk tone and upcoming U.S. consumer inflation figures could help limit further losses for gold in the near term.

From a technical standpoint, the gold price is trading just above the major support area of $2,017, which is a confluence of the 50-day moving average, the lower band of the Bollinger Bands, and the 38.2% weekly Fibonacci retracement level. The 50-day moving average is above the 100-day moving average, indicating that the overall bullish momentum has not shifted yet. Meanwhile, the Stochastic oscillator is at extreme oversold levels, possibly hinting that a correction to the upside might be realistic in the near short-term outlook.


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.