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 unemployment, Canadian inflation, British inflation, Fed meeting, Bank of England interest rate decision

 Tuesday:

• British unemployment at 09:00 AM GMT for the month of October is expected to hold steady at 4.3% while the claimants are expected to increase to 28,200 for the month of November compared to the previous recording of 26,700.
• Canadian inflation rate at 15:30 GMT. The expectations for the month of November is that the rate could go up to 2.2% from the previous 2%. This might be somewhat bullish news to the market participants trading the loonie.

Wednesday

• UK inflation rate at 09:00 AM GMT. The consensus is for an increase from 2.3% to 2.5% in November. If the consensus is correct then it would be a 6 month high figure of British inflation and could potentially create some short minor gains for the quid since it could influence the decisions of the Bank of England on their next meeting.
• Fed interest rate decision at 21:00 GMT is broadly expected to proceed with a 25 basis points cut reaching 4.50%. According to the Fedwatch tool there is 97% chance of a 0.25% cut therefore its pretty certain that the rate cut will take place but the important part is the subsequent press conference where market participants will try to get some hints as to the future direction of monetary policy.

Thursday

• The Bank of England decides on their interest rate at 14:00 GMT. The general expectation is that the central bank will hold their rate stable at 4.75% but in the event that we witness another rate cut it could put some pressure to the quid in many of its pairs, especially against the US dollar whereas in the unlikely event of a hike it might give some support on the British pound in the aftermath of the release.

Friday

• Japanese Inflation rate at 01:30 AM GMT. The anticipation here is for an increase of around 0.2% reaching the figure of 2.5%. In the event of this anticipation becoming reality then the yen might see some short-term gains against its pairs.
• US core PCE expected to be released at 15:30 GMT is anticipated to drop by 0.1% for the month of November. The PCE index shows the changes in the price of goods and services bought by consumers for consumption and it excludes food and energy. The PCE reading is one of the vital components taken into account by the Federal reserve when deciding on their monetary policy and a slow down of the Index reading could probably influence a more dovish stance on the Fed next meeting.

USOIL, daily

The price of oil slipped after a weekly gain due to concerns about weakening demand in China, the world’s largest oil importer. Chinese economic data showed a decline in crude refining and oil demand, along with lower-than-expected retail sales growth. In addition, Chinese refinery activity decreased in November, contributing to a 3.3% year-on-year drop in cumulative apparent demand for crude oil. Also, the oil market has been constrained by OPEC+ supply curbs and uncertainty about the impact of a Trump presidency on global growth and sanctions.

On the technical side, the price is currently trading above the upper boundary of the triangle formation which seems to be approaching its completion. The 23.6% of the weekly Fibonacci retracement level as well as the 100-day moving average are acting as a support while the Stochastic oscillator is in the extreme overbought level hinting to a possible continuation of the overall bearish trend in the market. On the other hand the Bollinger bands have somewhat contracted showing that volatility is slowing down and that could probably mean more sideways action in the upcoming sessions. If the current area of support proves to hold the price from further declining then the first area of possible resistance might be found around the $72.50 which consists of the 38.25 of the weekly Fibonacci retracement level and the previous short term high around early November.

Gold-dollar, daily

Gold prices gained on Monday due to a weaker dollar and anticipation of a third rate cut by the U.S. Federal Reserve. The dollar’s decline made gold more affordable for holders of other currencies while market participants are waiting for the Fed’s policy meeting and guidance on future rate cuts. Traders have priced in a Fed rate cut but anticipate a wait-and-see approach afterward, driven by potential inflationary risks from U.S. President-elect Trump’s policies. Geopolitical tensions, including the renewed Israel-Gaza conflict and South Korean political turmoil (impeachment of President Yoon), further boosted gold as a safe haven. However, gains face headwinds from China’s economic concerns, weaker Indian demand due to high prices, and a strengthening USD.

From a technical point of view, the price has rebounded around $2,640 area and is currently testing the resistance of the 50% of the daily Fibonacci retracement level. The aggressive rejection two times in the past month around $2,720 made this area a major technical resistance level on the chart while the Stochastic oscillator is in neutral levels indicating that the price has the potential to move to either direction in the near short term. The faster 50-day moving average is still trading above the slower 100-day showing that the overall bullish trend is still valid despite the rather aggressive bearish correction in the past couple of months.

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