Market analysis

Week 17 Oil and Gold: Price review for the week ahead

By Antreas Themistokleous

22 April 2024

exness-oil-gold-3

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.  Top news coming up: Australian inflation, US GDP growth, BoJ interest rate, and US PCE.

Wednesday:

The Australian inflation rate is generally expected to decline and reach 3.4% against the previous 4.1%. If this is accurate then the Aussie dollar might face some minor losses against its pairs because it might pose a reason for a dovish stance by the Reserve Bank of Australia (RBA) in their next meeting on the 7th of May

Thursday:

US GDP growth for the first quarter of 2024 is expected to decline to 2.5% against the previous figure of 3.4%. If these rather pessimistic expectations are met then it might create some minor losses for the dollar while supporting many of its instruments traded against it.

Friday:

BoJ Interest rate decision at 03:00 AM GMT. The market consensus is that the rates will remain static at 0% while in the unlikely scenario of any shift away from this figure will most certainly create volatility on yen pairs.

US core PCE at 12:30 PM GMT. The market is expecting this figure to remain stable at 0.3% month over month but if any surprise is seen at the time of publication would most probably create volatility in the majority of the dollar pairs.

USOIL, daily

Oil prices fell after experiencing back-to-back weekly declines due to concerns over potential actions from Iran and Israel amidst tensions in the Middle East. Also, increased US stockpiles and a stronger dollar amplified by a hawkish Fed stance. The US House passed sanctions on Iran's oil sector, impacting market dynamics while Iran downplayed the risk of escalation in the Middle East; however, the tension in the region continues to unsettle oil markets.

The US House of Representatives passed an aid package for Ukraine and Israel, including measures that could impact Iran’s oil production. Senate consideration of the bill is pending. Investors are also closely monitoring US economic data and earnings reports from major oil companies for further insights.

On the technical side, the price has found sufficient resistance on the upper band of the Bollinger bands and has since corrected to the downside. Currently, the price is trading at the major technical support area that combines the 50-day moving average, the 38.2% of the daily Fibonacci retracement level, and the lower Bollinger band.

The Stochastic oscillator is recording extreme oversold levels but this does not mean that it cannot remain in the oversold level in the coming sessions. If the bearish momentum continues in the near short term then the next area of possible support might be found around the $80 area which is the psychological support of the round number as well as the area of price reaction in late March.

Gold-dollar, daily

Gold prices retreated as geopolitical tensions in the Middle East eased, reducing demand for safe-haven assets while traders are awaiting US data to gauge the outlook for monetary policy and its potential impact on gold prices. Despite recent strikes between Israel and Iran, Tehran downplayed the significance of the conflict, leading to a moderation in market concerns.

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 22 April 2024, the probability of a rate cut was pushed back to the September meeting according to the Fedwatch tool.

From a technical point of view, the aggressive rally on the price of gold has lost some steam after finding resistance around the $2,400 mark. The price is currently trading above all moving averages indicating the bullish momentum in the market while the Stochastic oscillator has been pushed back to neutral levels after the minor bearish correction in the market.

The Bollinger bands have slightly contracted, but are still quite far apart from the upper and lower boundaries, indicating that volatility is still increased. In the event of a minor bearish correction, the first area of possible support might be found around the $2,300 mark, which is the psychological support of the round number and also just below the 23.6% of the daily Fibonacci retracement level.


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.