Gold, Oil and EURUSD Weekly Analysis - Week 23

Gold posts a second week of gains

Gold prices surged over 1.3% by Friday’s close capping a volatile trading week. The strong gains in gold prices reflected the market’s shift to a risk off sentiment amid growing trade tensions. The ongoing trade wars saw President Trump slapping Mexico with tariffs while also ending the preferential trade status with India.

The rebound in gold prices now potentially indicate a mixed sentiment in the market. The upside in gold is unlikely to be maintained until we see a retest of the 1285 level of support. Establishing support here could signal a change of trend to the upside. Price action will still need to break past the previous highs of 1340 to confirm this view.

The scope for a decline below 1285 could however bring the bearish bias into view. The hidden bearish divergence on the daily chart still remains intact. But the weekly gains have put gold on a bullish reversal course after price fell for three consecutive months before.

Oil tumbles as 50.0 comes within sight

Crude oil prices fell sharply on Friday, losing over 5% on the day. For the week, Crude oil prices were down a massive 9%. The declines in the crude oil prices comes as slowing economic concerns globally could see lower demand for oil.

The disappointing economic data from China also added to the ongoing concerns. However, oil prices fell despite the fact that the U.S. has imposed sanctions on Venezuela and Iran, effectively cutting oil production.

As we have maintained, oil prices will likely test the $50.00 psychological support in the near term. A retest of this level for support will suggest a possible rebound in price over the coming months.

Euro rebound not convincing yet

The common currency posted a rebound on Friday, gaining a modest 0.35% on the day. Still, given the ongoing sideways range in the euro currency, the rebound is unlikely to attract any new buyers into the market. The main resistance level at 1.1200 remains critical.

Near the current lows, price action indicates a potential descending wedge pattern taking shape. Therefore, there is a small bias to the upside. Gains are however likely to be capped near 1.1200 level.

The week ahead will see the ECB’s monetary policy meeting that will take place on Thursday. While no changes are expected, the ECB could strike a cautious tone in the markets. This could keep the euro currency to remain in the range.