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Gold prices rise after dismal US economic data

XAUUSD 1805

The precious metal posted strong gains into Friday’s close after a series of worse economic reports from the United States. Industrial production saw the biggest drop in history in the month of April as it fell 11.2% on a month over month basis. Later, retail sales for April saw a 16.4% drop on a monthly basis.

Gold prices have been trading rather flat over the past few weeks. As a result, price action saw the upper range forming at 1779.90. This was breached last Friday. But the pace of gains remains weak, questioning whether gold has enough momentum to continue further to the upside.

For the moment, watch for a convincing close above 1779.90. Failure to close above this level could see gold prices pulling back. This could see the precious metal once again moving back into its sideways range. The lower support at 1683.40 could be the downside target.

Crude oil prices rise as OPEC+ pledges faster production cuts

WTI 1805

WTI Crude oil prices got a boost after the OPEC secretary general said on Friday that OPEC+ will be focusing on more production cuts. He also noted that some OPEC countries were already reducing production in an effort stabilize oil prices.

WTI Crude oil has been trading rather flat over the past week. But following the comments, oil prices managed to jump higher. This has somewhat invalidated the potential inverse head and shoulders pattern that we were watching. Also the pace of gains remains weak.

Still, we continue to watch oil prices. A stronger close above the 28.00 level could confirm the upside. The next big target for oil prices will be at the 47.00 level which marks a retest of a major support level that broke. To the downside, as long as prices remain above 28.00, we should see a steady rally building up.

Euro trades flat, unmoved by Eurozone GDP

EURUSD 1805

The euro currency was practically unmoved after the Eurozone’s preliminary GDP report saw the worst contraction in history. Preliminary estimates on the GDP report showed that the economic activity in the Eurozone fell 3.8% in the three months ending March 2020. On a year over year basis, GDP was down 3.2%.

The euro currency remained trading flat near the 1.0800 level. But given the fact that the EURUSD has not moved much from this level of support, we could see the consolidating overwhelming the support area. This puts the downside bias into question as the EURUSD could weaken further.

For the moment, watch how price action unfolds near the 1.0800 level of support. Failure to post any highs above the swing high of 1.0900 could potentially signal a move lower in the common currency. Yet, even if the EURUSD breakouts lower, it would still be confined within its range above 1.0700.

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