Week 44 data: Oil and Gold

This weekly data preview examines USOIL and XAUUSD. The primary drivers in the markets for the near short term are the economic data releases scheduled for later this week.

The most important economic data for this week are:

Tuesday:

The Bank of Japan's interest rate decision is at 03:00 AM GMT. The market consensus predicts the central bank will maintain interest rates at -0.1%, with no major surprises anticipated.

Flash European GDP and inflation rate data will be released at 10:00 AM GMT. GDP growth is expected to drop to 0.2% from the previous reading of 0.5%. Concurrently, the inflation rate is projected to decrease to 3.2% from 4.3% in September.

NBS manufacturing PMI, scheduled for 01:30 AM GMT, is anticipated to remain stable at 50.2 points. NBS primarily focuses on large state-owned firms, which generally surpasses the Caixin version in size. If accurate, this data would suggest that manufacturing at state-owned firms is expanding. This could influence production-related instruments like oil, silver, and copper.

Wednesday:

Caixin manufacturing PMI is set for 01:45 AM GMT. It is forecasted to rise from 50.6 to 50.8 points. The Caixin survey emphasizes private and export-oriented companies. If these expectations hold, it indicates that Chinese exports are growing. This growth could impact major production-related assets like oil, natural gas, and silver.

US manufacturing PMI is scheduled for 02:00 PM GMT. The market predicts the October figure to remain stable at 49 points, suggesting that the US manufacturing sector isn't expanding. This stagnation might exert downward pressure on the dollar.

The Fed's interest rate decision will be announced at 06:00 PM GMT. The general expectation is for the rate to remain steady at 5.5%. The likelihood of a rate cut is less than 4%. Market participants will closely monitor comments from central bankers during the subsequent press conference for insights into future monetary policy direction.

Thursday:

The Bank of England's interest rate decision is slated for 12:00 PM GMT. The majority expect the central bank to maintain the rate at 5.25%. However, if there's an unexpected rate hike, it could bolster the pound, especially against the US dollar. Conversely, a rate cut might adversely affect the British pound following the announcement.

Friday:

The Canadian unemployment rate for October is expected to be released at 12:30 PM GMT. Predictions suggest a slight increase of 0.1%, reaching 5.6%.

US NFP & unemployment rate data will be unveiled at 12:30 PM GMT. The unemployment rate is forecasted to remain at 3.8%. NFP projections indicate a decrease to 188K from the previous 336K. The past two publications exceeded expectations, and a similar outcome could offer support to the greenback.

USOIL, daily

Oil prices fell by $1 a barrel on Monday. Investors are awaiting the Federal Reserve policy meeting outcome and China's manufacturing data. Market caution arises from concerns about a potential economic downturn affecting fuel demand. Despite Middle Eastern conflicts, oil prices declined due to easing concerns over Israel's ground offensive in Gaza escalating into a broader conflict.

Technically, the price operates between the 50 and 100-day moving averages. The Stochastic oscillator is nearing its extreme oversold level. Presently, the price is testing the 100-day moving average's support. 

Coupled with the oversold Stochastic, there might be an upward bounce in the near short term. If this trend is confirmed, the first technical resistance could be around the $85 price area. This area combines the psychological resistance of the round number with the 38.2% of the weekly Fibonacci retracement level.

Gold-dollar, daily

Gold prices hovered around the crucial $2,000 mark on Monday, driven by safe-haven demand amid escalating Middle Eastern conflicts. Investors are cautious ahead of the US Federal Reserve policy meeting and the US job report on Friday. Both events are expected to influence volatility across instruments traded against the Dollar.

The Fed will likely maintain interest rates, but market participants will keenly await Chair Jerome Powell's subsequent press release commentary. Strong economic data and Middle East conflict concerns are anticipated to support gold prices with increased volumes.

Technically, gold prices have drawn significant support from the 38.2% weekly Fibonacci retracement level, rallying until this report's drafting. As the US market readies to open, gold appears to be losing momentum, moving slightly downward.

Simultaneously, the Stochastic oscillator has remained in the extreme overbought zone for two consecutive weeks. This trend might indicate a forthcoming correction. If this correction occurs, the initial support area might be around $1,975. This value comprises the 38.2% weekly Fibonacci retracement and the price's latest reaction area.

This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.

---

Author:

Antreas Themistokleous

Antreas Themistokleous is a trading specialist in Exness. He is a Certified Financial Technician since 2018. As a member of the Society of Technical Analysts, Antreas is implementing advanced use of indicators and patterns to conclude in an action plan for different trading strategies.