Week 32 technical analysis on oil and gold

USOIL, daily

Oil prices dropped to their lowest levels in seven months due to a sell-off in wider financial markets and weaker economic data from the U.S. and China, signaling concerns about global demand. Rising tensions in the Middle East, particularly the possibility of a retaliatory strike on Israel by Iran, are being closely monitored by traders. Oil prices also declined because OPEC oil output rose in July, despite ongoing voluntary supply cuts, adding to the pressure on oil prices. Prices dropped below $73 (USD), erasing this year's gains and reflecting the ongoing volatility in the oil market.

From a technical perspective, the price is testing the support level of the 78.6% weekly Fibonacci retracement. Today's candlestick is below this area and the lower band of the Bollinger bands, indicating increased volatility. The Stochastic oscillator has declined to extreme oversold levels after last week's rally to $78, hinting at a possible short-term correction to the upside. The 50-day moving average is still trading below the slower 100-day moving average but is close to crossing above it if the correction happens in the upcoming sessions. For now, the next major support level might be around $70, which is both a psychological support level and an area of price reaction in early 2024.

Gold-dollar, daily

Despite reaching record highs, gold's consumer buying may be at risk due to the surge in prices, potentially leading to a slowdown in demand in the coming quarters. Gold prices dropped due to profit-taking and concerns over a potential U.S. recession, despite expectations of a rate cut from the Federal Reserve. Traders are pricing in a more than 90% chance of the U.S. central bank lowering rates by 50 basis points in September, reflecting increasing expectations for a rate cut. While geopolitical tensions and expectations of monetary policy easing may support investor interest in gold, the combination of bearish and bullish factors is likely to keep the price in a relatively narrow range for the rest of the year.

Technically, the price found resistance at the 23.6% daily Fibonacci retracement level, just below the psychological round number of $2,450, and has since corrected downward. The Stochastic oscillator has declined to neutral levels, while the 50-day moving average is still slightly above the 100-day moving average, validating the overall bullish trend in the gold market. Numerous geopolitical issues in the upcoming months could significantly affect the price of gold, making it difficult to forecast the medium-term trend. However, in the short term, the Fibonacci levels would seem to be the targets, depending on price direction.

Fundamental influencers to watch

Oil and gold is also at the mercy of economic calendar events, so be sure to watch the charts closely before the following data releases.

Tuesday:

• RBA interest rate decision at 04:30 AM GMT:
• Canadian Balance of trade at 12:30 GMT:

Thursday:

• Chinese Balance of trade at 03:00 AM GMT:

Friday:

• Chinese inflation rate at 01:30 AM GMT:
• Canadian unemployment rate at 12:30 GMT: