Gold, Oil and EURUSD Weekly Analysis - Week 12

Gold prices post solid declines on the week


The precious metal lost over 8% on the week as prices tumbled from highs near 1700 to 1529 into Friday’s close. The week marks one of the most tumultuous week for the financial markets as investors grappled with the reality of the health crisis. The precious metal, which remains a safe haven asset shed the gains quite sharply.

Technically, the price action points to a rebound in the near term. We expect that the support level near 1529 will hold. This will see a rebound where price could retrace back to the 1580 – 1590 levels in the near term. There is also scope for a deeper retracement to the original breakout level near 1640.

Nevertheless, watch these two levels in the near term. A reversal at 1590 or 1640 will once again trigger sharp declines. This time, we anticipate the declines to push gold prices down to the 1440 handle where a major support is pending retest.

Oil prices steady after declines

WTI 1603

Crude oil prices are somewhat steady after the initial sell off during the week. Price action is holding a range after the initial dip to the 28.00 level of support. In the near term, the corridor between 35.00 and 30.00 is well established. We can anticipate further gains or declines on a breakout from this range.

So far, the fundamentals remain mixed. Russia and Saudi Arabia continue to remain at odds in regards to the production limits. Thus, we expect that there will be no major shifts to the status quo in the near term. This could keep oil prices well subdued taking into account the decline in global demand.

On the daily charts, we see that price action is indicating to a bullish divergence. With the major resistance level seen at 42.00, watch the short term range mentioned earlier. An upside breakout could potentially trigger a move to this region.

Euro currency gives up gains


The EURUSD continues to move into the longer term side ways range. As price action shows last week, the currency pair gave up nearly 50% of the gains made from earlier this year. The declines come as the U.S. dollar managed to rebound strongly after the initial sell off. This has put downside pressure on the euro.

Following the failure to continue above 1.1400 level, the EURUSD is back into the range. We expect the declines to potentially push the EURUSD down to 1.1000 level. Given that this level has seen a lot of consolidation, we expect prices to stall here.

However, in the longer term horizon, note that the EURUSD has broken past the falling trend line. It also briefly took support from the trend line before bouncing higher. Therefore, there is scope for prices to maintain the bullish momentum.

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