Weekly Data: Oil And Gold: Price Review For The Week Ahead.

This article was submitted by Antreas Themistokleous, an analyst at Exness.

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.

Highlights of the week: British inflation, US inflation, Australian unemployment, British & Chinese GDP

Tuesday:

• S Producers Price Index (PPI) at 15:30 GMT. Market participants are expecting the figure to come out at 0.3% for December over 0.4% of the previous month. If this is confirmed then it could potentially hint to lower inflation figures in the coming months.

Wednesday:

• UK inflation rate at 09:00 AM GMT. The consensus is for a pause at the current level of 2.6%. If the publication comes out higher than expected then the pound might find some short-term support against its pairs. On the other hand, if the figure is lower than expected it could influence a more dovish stance from the Bank of England on their next meeting.
• US Inflation rate at 15:30 GMT where the consensus is for an increase of around 0.1% reaching 2.8% 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 on 29th of January where the probability for now is that they will keep the rates stable with a chance of 97% according to fedwatch tool. If there is any significant surprise change on the actual figure then it will respectively affect the dollar in the short term.

Thursday:

• Australian unemployment rate at 02:30 AM GMT. The market is expecting a slight increase on the figure of around 0.1% for the month of December. This might have a minor negative effect on the Aussie dollar if the expectations are confirmed.
• British GDP growth at 09:00 AM GMT. The market consensus is that the figure will be increased from -0.1% to 0.2% month over month.  This might not have a major effect on the pound since it is for the month of November however it would provide some hints on the overall economic performance of the British economy.

Friday:

• Chinese GDP growth rate at 04:00 AM GMT. Market participants are expecting the figure to come out at 5% over 4.6% of the previous reading for the quarter. If this is confirmed then we might see some short term support on the yuan against its pairs.
• Chinese industrial production at 04:00 AM GMT. Industrial production from China for the month of December is expected to remain stable at 5.4%. If this is broadly accurate we might see some pressure in the production related  instruments like crude oil,silver and copper.

USOIL, daily

Oil prices rallied nearly 3% to a three-month high due to the imposition of new U.S. sanctions targeting Russian oil and gas revenue, potentially disrupting Russian oil exports. The sanctions are expected to severely disrupt Russian oil exports to major buyers like India and China, leading them to scramble for alternative sources. In addition, extreme cold in the U.S. and Europe has also contributed to the increase in oil prices by boosting demand for heating oil and other heating fuels.

On the technical side, the price has broken above the triangle formation that in effect in the second half of the year and is currently testing the resistance of the upper band of the Bollinger bands. Late last week the price even traded above the Bollinger bands showing that volatility has return in the market for crude oil after some sideway movement in the past couple of months. The recent bullish trend has pushed the 50-day moving average close to the 100-day and could possibly even cross above it validating the bullish momentum. On the other hand the Stochastic oscillator is in the extreme overbought levels for a prolonged period of time and it is possible to see a bearish correction before resuming the bullish run.

Gold-dollar, daily

Gold price faces pressure from hawkish Fed expectations, elevated US bond yields, and a bullish USD, despite geopolitical tensions providing some support. Gold is widely seen as a hedge against inflation, has an inverse correlation with the US Dollar, and is impacted by geopolitical instability. The US Nonfarm Payrolls report’s upbeat results of last week, reinforced expectations of a pause in the Fed’s rate-cutting cycle with a possibility of around 97% , according to the fedwatch tool, leading to elevated US bond yields and a two-year high for the USD, which acts as a headwind for gold.

From a technical point of view, the price has found sufficient resistance around $2,690 which is a major technical area on the chart consisting of the 61.8% of the daily Fibonacci retracement level as well as the upper band of the Bollinger bands. Currently, the price is on its way to test the support area of $2,660 which is made up of the 50% of the Fibonacci level and the 100-day moving average line. The Stochastic is in the extreme overbought levels and its possible to see the recent bearish correction projecting into the near short term. The latest bullish run failed to push the 50-day moving average to cross above the 100-day validating the overall bearish momentum that has built up since early November with the price failing to reach anywhere near the top of $2,790 yet.

Disclaimer: the opinions in this article are personal to the writer and do not reflect those of Exness or Finance Feeds.