Gold, Oil and EURUSD Weekly Analysis - Week 27

Gold holds steady above 1750

The precious metal closed the week, firmly perched above the 1750 handle. The gains come amid investor sentiment on risk, falling. The rise of new pandemic cases has once again put investors on the backfoot. This has led to a modest risk off sentiment in the markets. At the same time, the risk off sentiment is putting gold in a more favorable position.

For now we expect gold prices to dip back to the 1730 handle to establish support. However, given the current bullish momentum, gold prices might continue to push on higher. The next main target is 1800 which has never been hit in the past nine years.

Gold prices will have to break out above the 1775 handle which was briefly tested last week. A firm close above this level will cement expectations for a test to the 1800 level eventually. In the near term, any pullbacks could see gold prices falling to the 1750 level where a soft support is forming.

Crude oil slips on fresh pandemic fears

Crude oil prices continue to trade below the $40.00 handle into Friday's close. The declines came after oil prices attempted to breakout above this level briefly over the week the week. Investors were cautious amid reports of rising cases in the United States and with some parts of the states postponing the reopening of their respective economies. The fresh fears of the pandemic outbreak once again puts the demand forecasts lower.

After attempting to post some modest gains on Thursday, oil prices gave back most of those gains. Prices trading firmly below the $40.00 handle, as WTI crude oil close the week at 38.17. The fact that the 40.00 resistance level is proving hard to break indicates that a potential pullback might be in the making.

We expect the soft support area around the 36.00 handle to hold up for now. This means that oil prices will trade within the 40 and 36 levels for the near term. A downside breakout below 36.00 could signal a possible correction lower down to the 28.00 where the long term support exists.

EURUSD continues to extend declines

The euro currency is maintaining a bearish bias since last week. Following the modest gains which saw a brief rally in the currency pair, the EURUSD has formed a lower high. This is indicative of a possible move to the downside.

For now, the last week's lows near 1.1165 looks to be the low point. A breakdown below this price level could however push the euro lower. The next main support is at the 1.1147 level. A test of this support area might signal continued declines. It will also indicate that a larger correction might be underway.

The main downside target will be the 1.1000 level. Establishing support here will give the euro a boost for upside gains. For now, watch how the EURUSD reacts to the initial lows near 1.1165.