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Gold, Oil and EURUSD Weekly Analysis - Week 28

Gold prices testing the trendline

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The precious metal was seen trading weaker on Friday. The declines came on a strong jobs report that saw the markets scaling back the best of a bigger rate cut in July. The U.S. economy showed a rebound in June. As a result the precious metal continued to post declines for the third consecutive day.

By Friday’s close, gold prices settled near the steep trend line. While this trend line isn’t breached yet, a close off this trend line could indicate further correction in the precious metal. The initial support is seen at the 1360 handle. A retest of this level will see gold re-establishing support at this level.

To the upside, the gains remain limited at the moment. Unless the trend line can act as a strong support, we expect the declines to continue. The strong gains logged over the past six weeks could see gold prices taking a break in the short term.

Crude oil attempts a modest rebound

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Oil prices attempted to post a modest rebound on Friday as price managed to pare losses from the day before. Oil prices gained over 1.5% on the day on Friday. The gains came on reports about OPEC production falling to the lowest levels in June 2019.

The price of crude oil is seen currently consolidating near the resistance/support area of 57.50. If this level is breached to the upside, we could expect to see strong gains coming in place. A close above 57.50 will open the way to the 60 handle initially followed by a test to 60.50 region.

However, the gains could be limited. Following this move, oil prices could remain caught within the range of 60.50 and 57.50. To the downside, if the resistance level cannot be breached, then oil prices could be looking to the downside, to test the 50.00 level.

Euro slips back to the familiar support

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The common currency continued its weak trend to the downside. Prices settled near the familiar support area of 1.1224 – 1.1200 region. The EURUSD has been consolidating near this level for quite a while. The latest retest of this level keeps the currency pair well within its sideways range.

The declines in the EURUSD came on account of a stronger USD due to the payrolls report. Besides this, economic data from Germany was also weak. Manufacturing orders fell sharply during the month of May, adding to the downside.

The current test of support at 1.1224 – 1.1200 level could mean that we could expect a short term rebound in price. EURUSD will likely maintain the range within the 1.1200 and 1.1395 level in the medium term.

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