Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 03/06/20

Gold prices trade flat despite a rise in equities


The precious metal is not making much gains stuck near the previous highs. Despite equity markets posting modest gains, gold has been stuck near the top end of the rally. Investors remain inclined to risk, but the social tensions in the United States and the rising escalations between US and China are helping gold prices to remain supported in the near term.

Price action continues to hover near the key price level of 1729.90. The failure to post any meaningful breakout above this level suggests that price action could be looking toward a correction. However, given the fact that gold remains within the range of 1729.90 and 1683.40, we could expect to see sideways consolidation again.

In the event that gold prices break down below 1729.90, price need to move lower. Only a strong breakdown below the 1683.40 will signal further declines. The next main target to the downside is the 1643 level where support will most likely form. It also marks the potential downside correction target.

OPEC+ expected to extend production cuts

WTI 0306

Crude oil prices are likely to get a fundamental boost on rumors that OPEC and Russia will extend production cuts. The original production cuts of 9.7 billion barrels will expire end of this June. The oil producing nations are expected to extend this cut into September this year. Oil prices continue to extend gains in this backdrop.

At the time of writing, WTI crude oil prices are trading above the $36.00 a barrel price point. With the fundamentals turning strong, we expect this steady pace of gain to continue. The upside target at 42.00 remains within sight given the current momentum.

There is of course a risk that price action could slip up for a correction. But this will put the previous price level near 28.00 as the prime target. Establishing support at this level will be crucial to validate any further gains in the near term. But given the current possibility, oil prices will likely head to the 42.00 level without any retracements.

Euro maintains gains as USD weakens


The euro currency is posting strong gains, riding on the back of a weaker US dollar. The gains come as investors across the world expect economies to return to normal. This has led to a modest risk on sentiment which has pushed the safe haven USD weaker over the past few days. The fact that some early indicators in the US suggesting a sharp recovery is also adding to this optimism.

Price action is now trading above the 1.1147 price level. This has proven to be a strong level of resistance that has proved hard to break. Therefore, a strong close above this level could potentially shift the bias to the upside. A strong close above 1.1147 will open the way for the EURUSD to rise to 1.1400 region easily.

But there is a risk of a correction. The lower support area near 1.1000 hasn’t been tested for support. Therefore, if we get to see a retracement off the 1.147 level, then a correction is very likely. Given the current momentum however, this correction will continue to maintain the upside bias that is currently in for the EURUSD.

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