Week 31 data: oil and gold: price review for the week ahead

The most important economic data for this week are: European flash GDP growth & inflation, BoJ, Fed and BoE interest rate decisions, Chinese manufacturing PMI, and the US job report.

Tuesday:

• Flash European GDP growth

Wednesday:

• NBS manufacturing PMI
• BoJ interest rate decision
• Flash European inflation rate
• Fed interest rate decision

Thursday:

• Caixin manufacturing PMI
• Bank of England interest rate decision
• US manufacturing PMI

Friday:

• US job report

USOIL, daily

Positive Chinese economic data eased concerns over oil demand, leading to a rise in oil prices from a six-week low. OPEC+ is set for a monitoring meeting amid speculation on potential production level alterations and the impact of rising geopolitical risks in the Middle East. OPEC plans to ease some production restrictions next quarter; however, weak demand from China, abundant supply from the Americas, and decreasing energy prices make it likely that this move will be postponed. The market awaits the US Federal Reserve interest rate decision and the subsequent speech, as well as the US job report on Friday, with both events expected to increase volatility on the majority of USD pairs.

On the technical side, the price is testing the support level of the 61.8% of the daily Fibonacci retracement, with today's candlestick being below this area for now. The stochastic oscillator has been at extreme oversold levels for the past couple of weeks, possibly hinting at an imminent correction to the upside. The 20-day moving average is still trading above the 50-day moving average, further supporting the narrative of a bullish correction in the short term.

Gold-dollar, daily

Gold prices rose in response to expectations of interest rate cuts by the Federal Reserve, which reduces the opportunity cost of investing in the precious metal. Weakness in the dollar also supported the rise in gold prices, as it retreated following key inflation data that pointed to some easing in US inflation. China's gold demand has declined due to record-high gold prices and a sluggish economy, impacting sales of jewelry and discretionary items. Despite the drop in jewelry purchases, sales of gold bars and coins have increased, partially offsetting the overall decline in demand for gold. The surge in gold prices is affecting cyclical Chinese consumption, but heightened haven demand and impending Federal Reserve interest rate cuts are supporting global gold prices. This week's focus is on key data from China for more insights into business activity.

From a technical point of view, the price has found sufficient support on the 50-day moving average and has since rebounded to the upside, even breaking above the 50% of the daily Fibonacci retracement level. The stochastic oscillator is now above the extreme oversold levels but still has some room to reach neutral levels, possibly hinting that the recent bullish correction might extend in the short term. The 50-day moving average is still trading above the 100-day moving average despite the recent selloff in the market, further validating the overall bullish momentum.