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Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 30/08/19

Gold likely to start a correction

Gold 3008

The precious metal, after weeks of maintaining a bullish rally is seen turning weaker since Thursday. Price action on the daily chart indicates that a bearish follow through could signal the start of the much needed correction. However, a lot depends on the fundamentals which could change any time.

The decline in the gold prices came on the back of the U.S. trade dispute with China easing. This was further validated after China commented that it was all for resolving the trade dispute peacefully. The comments sent investors to pile into the risky assets pushing gold prices lower.

Technically, gold prices could correct to the 1500 handle. Given the psychological importance, the precious metal could bounce off the support level initially. We expect to see a lower high being formed as a result. Alternately, if the 1500 support fails, then the precious metal could decline lower.

WTI crude oil extends gains for three consecutive sessions

WTI 3008

Oil prices were seen rebounding since the middle of the week. The gains came after the weekly EIA report showed that there was a larger than expected drawdown in inventory. For the week ending August 23, U.S. oil inventories fell over 10 million. This was more than the forecasts of a 2.13 million drawdown.

The data was also validated with the American Petroleum Institute which said that there was about 11.1 million barrel drawdown earlier in the week. The larger than expected drawdown sent oil prices higher. Investors briefly ignored the ongoing trade tensions and the dampening global outlook.

Technically, oil prices are back at the support area that previously broke at 56.00. This level is now serving as resistance. As long as this resistance level holds, oil prices could remain biased to the downside. But this could change in the event of a strong breakout higher.

EURUSD resumes downtrend


The euro currency was seen posting steady declines on Thursday. The declines came largely due to a stronger U.S. dollar. Economic data from the Eurozone continues to remain weak. Latest inflation figures from Germany suggest that consumer prices remain sluggish.

The ECB is due to meet in the middle of September. It is widely expected that the central bank will announce plans for its QE program and perhaps cut interest rates as well. The EURUSD has been largely caught in a range for the most part this year.

As price action approaches the previously established six year low, we anticipate further declines if the lows of 1.1027 is breached. A breakdown below this level will accelerate declines further. This could very well mark the fact that investors are discounting an ECB policy tightening in September.

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