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Gold, Oil and EURUSD Weekly Analysis - Week 35

Gold rebounds as risk appetite falls

Gold 2608

Investors bid up the precious metal higher on Friday. This came due to renewed trade tensions between the U.S. and China. After China announced that it was raising tariffs on over $75 billion worth of goods from the U.S. President Trump hit back strongly.

His comments dented the market sentiment which was already weak. Gold prices, which were seen trading subdued for the most part this week managed to find support at the 1508 – 1500 level. Following this, there was a strong surge to the upside, sending gold to close at 1525.90 by Friday’s close.

The gains however have failed to push gold above the previously established highs of 1534.89. This could potentially mean that there could be a bit more consolidation for the precious metal. We expect prices to remain range bound within 1534 and 1500 for the moment.

Crude oil slips as economic slowdown likely to continue

WTI 2608

WTI Crude oil prices managed to close the week on a bearish note. While oil prices remained flat over the week, they fell sharply towards the latter part of the week. This coincides with the resistance level at 56.00 being tested.

The current declines will see oil prices moving lower to the 52.00 handle in the near term. This will keep the commodity back into the range that has been established. The declines in oil prices come as investors remain concerned that the trade spat between Washington and Beijing will dent global economic growth.

In turn, this is expected to hit the demand for crude oil. Oil prices have remained rather flat since hitting below 52.00 in early-mid June.

Euro closes the week on a strong note

EURUSD 2608

The common currency managed to post strong gains by Friday’s close. The EURUSD closed 0.54% higher on the day. The gains came only due to the weaker USD which was hit because of the comments from President Trump.

The Fed Chair, Jerome Powell also spoke on the sidelines of the Jackson Hole Symposium. He said that the Federal Reserve was ready to provide more stimulus if required. This should have typically kept the USD on a stronger footing, but the market sentiment suffered due to the trade dispute.

The EURUSD has managed to clear the resistance area of 1.1129 region. A follow through from here is required in order to post more gains. The next resistance is at 1.1200 region. We expect the EURUSD to once again move into a flat range within these levels.

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