Technical analysis

Week 41 data: oil and gold

By Antreas Themistokleous

10 October 2023

This weekly data preview focuses on USOIL and XAUUSD, with upcoming economic data being the primary drivers for the short-term market outlook. Here are the key economic events for the week:

The German inflation rate will be released on Wednesday at 06:00 AM GMT. Market consensus for September indicates an expected decline to approximately 1.6%, down from the previous 4.5%.

The US Producers Price Index (PPI) is scheduled for release on Wednesday at 12:30 PM GMT. Market participants anticipate a reading of 0.3%, a decrease from the previous 0.7%. Such a result could signal lower inflation figures in the coming months.

Wednesday will also see the publication of minutes from the Federal Reserve, providing insights into the meetings of the FOMC (Federal Open Market Committee). Given the current significance of interest rate policy in financial markets, investors will closely assess the probability of the next interest rate decision. Presently, there is an approximate 80% chance of a rate pause. While not overly hawkish, any consensus among FED members regarding a further rate hike could change the landscape.

British GDP figures are set to be released on Thursday at 06:00 AM GMT. Market expectations point to a month-over-month increase of 0.7%, up from 0.2% in August. While this data may already be factored into the market, any unexpected deviation from the anticipated figures could lead to volatility in GBP pairs.

On Thursday at 12:30 PM GMT, the US inflation rate will be unveiled. The year-over-year figure is expected to decline from 3.7% to 3.6%. If these expectations are broadly met, the dollar may experience slight losses, while other assets like shares, gold, and indices could potentially see some degree of recovery.

USOIL, daily

Crude oil prices have surged to $89 per barrel amid concerns regarding the recent attack by Hamas on Israel. This development has raised apprehensions about heightened tensions in the Middle East and their potential impact on oil production.

These concerns have led to fears of prolonged high oil prices and inflation. Additionally, there is the possibility that Israel's conflict with Hamas could lead to stricter enforcement of sanctions on Iranian oil, which could affect the global oil supply. This conflict might also complicate efforts to broker a deal involving the Biden administration, Saudi Arabia, and Israel, potentially influencing Saudi Arabia's willingness to increase its oil output.

While there is currently no immediate threat to oil supplies, the market could tighten if the United States imposes more rigorous sanctions on Iranian oil exports. Moreover, if Iran's involvement in the attack is confirmed, Brent oil prices could surpass $100 per barrel.

From a technical perspective, the price has broken below a previously bullish trendline and has not yet indicated a resumption of the overall bullish momentum. At present, the price is trading within a robust technical resistance zone on the chart. This zone includes the 38.2% level of the weekly Fibonacci retracement, the bullish trendline, and an inside resistance area that has been in place since early August.

If the bulls demonstrate their strength and we witness a valid break above the $86 price level, the next potential resistance level could be around $93. This level comprises the 50% mark of the weekly Fibonacci retracement, along with an area that saw significant price action in October and November of 2022.

Gold-dollar, daily

Gold prices experienced a notable increase of over 1% on Monday, primarily attributed to the ongoing military conflict between Israel and Hamas. This geopolitical tension in the Middle East has heightened political uncertainty, prompting investors to seek refuge in safe-haven assets such as gold. However, the potential for high US interest rates in the long term may pose a challenge to gold's price. Additionally, investors are closely monitoring the outcome of an inflation report later in the week and the minutes from the US central bank's September meeting.

From a technical perspective, gold prices have recently corrected to the upside, finding solid support at both the lower Bollinger band and the $1,810 support level, which has been a key price reaction area since early March. Currently, the price is testing resistance at the 50% level of the daily Fibonacci retracement, positioned near the psychological resistance of $1,850. Despite the faster moving average (50-day) trading below the slower moving average (100-day), there is potential for the recent upward correction to continue if the price successfully breaks above the $1,850 price level.

Should this scenario materialize, the next significant technical resistance area could potentially be observed around $1,900. This area combines the psychological resistance of the round number and a region just below the 38.2% level of the daily Fibonacci retracement.

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


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.

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