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Gold, Oil and EURUSD Weekly Analysis - Week 22

Gold consolidating near the top of the rally

XAUUSD 2505

The precious metal managed to recover some of the losses made from earlier in the week on Friday. Gold prices settled at 1735.67, rising about $9.00 into the close. However, the rally seems to be stuck with prices trading flat rather than posting any new highs. As a result, this could potentially signal a move lower, or a temporary pause ahead of a breakout higher.

The sideways range near 1729.89 – 1683.40 remains in place. Despite a brief breakout above this level, gold prices are consolidating near the upper range. The stochastics oscillator is also rather flat indicating that prices might be taking a breather.

But in the near term, unless we see a strong close above the highs at 1760, gold prices could be looking a tad weaker. On the weekly chart, we can see that gold closed with a spinning top pattern. This might suggest a correction to the downside.

Crude oil rally pauses on China’s economy recovery concerns

WTI 2505

WTI Crude oil prices showed signs of the rally stalling on Friday. The commodity has been in a strong recovery phase ever since prices hit rock bottom a month ago. After a steady increase above $30 a barrel, oil prices turned a bit volatile into Friday’s close. This comes as China reportedly abandoned its GDP target for the rest of this year. This sparked concerns on China’s economy likely slowing and as a result it could weaken global demand.

For the moment, the gains in oil prices need to see a pullback or a correction. Therefore, this will remain consistent with the current view on the oil markets. After oil price broke past the 28.00 level, the rally to close above $33.00 saw no major support level forming.

Thus, if oil prices turn lower, we could expect to see a pullback to the 28.00 handle. Establishing support at this level will potentially confirm that further upside is likely in crude oil. In the event of a pullback below 28.00, then expect oil prices to slip to 20.00 handle next.

EURUSD rally fizzles out once again at 1.1000

EURUSD 2505

The euro currency gave back the gains since Thursday after prices initially rallied up to the 1.1000 level. But with this level proving to be hard to breach, prices are back lower. For the moment, the EURUSD is being supported off the lower median line.

A reversal off this level could however indicate that the EURUSD might breakout above 1.1000 region. This will gradually open the way for the currency pair to post new gains and possibly even breakout of its sideways range.

Alternately, if the EURUSD slips outside the lower median line, then we expect a move to the lower support area near 1.0784. But for the moment, watch how price action will unfold near 1.0900 region.

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