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Gold, Oil and EURUSD Weekly Analysis - Week 32

Gold recovers back to the highs to the end of the week

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The precious metal was seen closing a rather volatile week. After initially falling to a two-week low, gold prices settled back near the previously established highs by Friday’s close. The reversal came amid a mix of economic and fundamental factors.

The reversal in gold came about as the U.S. and China trade wars were reignited by President Trump who tweeted that the U.S. would impose an extra 10% tariffs on imports from China. This was on about $300 billion worth of goods imports from China. The tweet sent the markets lower as investors rushed to the safe haven assets.

Gold prices were seen reversing losses and closed back near the resistance area of 1440. The overall consolidating triangle still remains intact. This potentially signals a possible consolidation in the near term. However, the bias remains to the downside as gold has failed to post further highs. Watch for a decline to 1360 area in the medium term if there are no new highs forming.

Crude oil prices drop as economic uncertainty continues

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Crude oil prices fell sharply on Thursday and Friday. The declines came mostly due to the strength in the U.S. dollar. The USD gained on the back of a less dovish Fed policy statement. Oil prices ignored the fundamentals.

OPEC’s oil production was seen to be weaker, while the EIA report showed a drawdown in inventories. But crude oil ignored the fundamentals and reversed right near the resistance area of 57.50. The declines pushed oil lower to the 54.00 region where a minor support remains.

A breakdown below this level could send oil prices lower to test the $50.00 handle. A retest of this psychological round number could be significant. But there is also scope for oil prices to maintain the range with 57.50 and 54.00 in the near term.

EURUSD attempting to reverse losses

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The euro currency was seen posting a reversal by Friday’s close after slipping to a new two-year low. The reversal came about following the retest of the lower trend line within the consolidating triangle pattern.

In the near term, the EURUSD could be seen retracing the gains back to the breached support area of 1.1129 – 1.1110. If this level does not yield, we could expect the EURUSD to consolidate near the current lows. Alternately, a breakout above this level could push the EURUSD back into its sideways range.

The next major upside is seen at 1.1200 – 1.1224 level. With the head and shoulders pattern failing, we could expect to see the EURUSD currency pair to continue moving sideways.

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