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Gold, WTI Crude oil and EURUSD - Intra week technical outlook, 31/12/19

Gold prices on track to close 2019 with 19% returns

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The precious metal continued its assault into higher territory, marking a likely 19% positive return on a year to date basis. Still, the precious metal is lagging behind the S&P500 index which is up 28% on the year.

The current gains in the gold prices indicate that investors will likely pull back into the year end. The overall trend remains to the upside for the moment. Price action is struggling near the resistance level of $1522. In the event of a breakout above this level, gold is quite likely to hit the $1600 an ounce mark.

To the downside, the risks are limited to the initial support at the 1500 level. As long as this level holds, there is scope for further gains. But if XAUUSD slips below the 1500 level, we expect a correction to be deeper. This would send gold lower to possibly the 1440 range.

Crude oil prices close out with over 30% gains

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Oil prices managed to pull off an impressive year, rising about 33% on a year to date basis. The gains came amid mixed uncertainty especially about the global economy on the back of the U.S. and China trade wars.

However, prices got a lift after OPEC managed to raise production cuts into March 2020. This helped oil prices to regain momentum. The fact that the trade spat is also showing signs of resolution has added to the bullish fundamentals for crude oil prices.

In the short term, oil prices are currently retreating in the resistance zone of 63.00 and 60.64 region. If prices fall out from this range, we expect to see a correction taking place. The declines could see oil prices likely heading back to the 59.00 level where support is most likely to form.

Euro makes modest gains into the year end

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The common currency is holding on to an impressive rally into the final closing days of the year. The gains came as investors eased back on the dollar bullishness. Economic data from the Eurozone was relatively sparse, leaving most of the flows from the USD.

The year end balancing is also one of the reasons for the dollar’s weakness. Currently, the currency pair is struggling near the top end of the resistance area of 1.1224 – 1.1200. If this level is breached, then the currency pair could be pushing a lot higher.

But given the thin trading, there is scope for prices to pullback. In such a scenario, the EURUSD is likely to slip back to the lower end of the range at 1.1129 – 1.1111 level. We expect prices to remain trading flat within this level in the near term if there is no upside breakout.

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