Weekly data: Oil and Gold: Price review for the week ahead

The most important economic data for this week are: US manufacturing PMI, BoC interest rate decision, US services PMI, US job report

Tuesday:

• US manufacturing PMI at 14:00 GMT. The consensus is for an increase from 46.8 to 47.8 points. Even though the expectations are for an improved image of the manufacturing sector in the U.S it is still below the 50 point mark suggesting that the manufacturing sector is still struggling to improve.

Wednesday:

• Bank of Canada interest rate decision at 13:45 GMT. The market consensus is that the central bank of Canada will make the fourth rate cut this year going from the current 4.5% to 4.25%. If the expectations are confirmed there might be some minor losses for the loonie in the short term.
• US job openings is expected to be released at 14:00 GMT. The expectations are for a decline in the figure of around 74,000 jobs but this might not have a significant effect on the dollar since the data is for the month of July and also all eyes will be focusing on the job report later this week for a more accurate conclusion on the labor market.

Thursday:

• US Services PMI at 14:00 GMT for the month of August. The consensus is for a slight increase of 0.1 points reaching 51.5. This might be rather bullish news for the Dollar since it would mean that the services sector in the States is still expanding.

Friday:

• Canadian unemployment rate at 12:30 GMT. The market is expecting a slight increase on the figure of around 0.1% for the month of August. This might have a minor negative effect on the loonie if the expectations are confirmed.
• US Job report at 12:30 GMT where the non farm payrolls and unemployment rate are going to be published. The expectations for the NFP is for an increase to reach 163,000 against the previous recording of 114,000. If these expectations are correct, we might see that the dollar could move up in various pairs in the aftermath of the release. On the other hand the unemployment rate is expected to decline from 4.3% down to 4.2%.

USOIL, daily

Oil prices are falling due to expectations of higher OPEC+ production and concerns about sluggish demand in China and the U.S. OPEC+ is set to proceed with a planned oil output hike from October despite fears about demand growth. OPEC plans to gradually add 180,000 barrels per day to restore halted production since 2022. Worries about Chinese economic growth and a slowdown in U.S. oil consumption contribute to pessimism about the short-term outlook for oil demand. The commitment of traders report shows that commercial traders are at a 6-month high which supports the bullish narrative in the coming sessions for crude oil prices.

On the technical side, the price has been trading in a sideway range between the high of $78 and the low of $72 for the past month. Currently, it is testing the support area of the 78.6% of the daily Fibonacci retracement level while the Stochastic oscillator is near the extreme oversold levels hinting that a pullback to the upside might be seen in the following days. On the other hand, the 50-day moving average is trading below the slower 100-day moving average validating the overall bearish trend in the market.

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Gold-dollar, daily

The decline in gold prices is attributed to the stronger USD and concerns about the sluggish Chinese economy, but expectations of a Fed interest rate cut may limit further losses. The recent upward revision of second-quarter GDP growth and robust consumer spending suggest a potentially less aggressive rate cut by the Federal Reserve, impacting gold prices. The Federal Reserve’s focus on the Personal Consumption Expenditures (PCE) index and upcoming jobs report will heavily influence the September rate decision and market expectations. The upcoming US PMI data and employment report on Friday will be closely monitored by traders for potential market impact.

From a technical point of view, the price dropped below the $2,500 mark briefly testing the support area of the 23.6% of the daily Fibonacci retracement level. The Stochastic oscillator has corrected to neutral levels after being at the extreme overbought level for almost a month straight. The faster-moving average, the 50-day, is trading well above the slower 100-day moving average validating the overall bullish trend in the market for gold; however if the price makes a valid break below the support of the Fibonacci levels there might be a short-term reversal before continuing further North.

Disclaimer: the opinions in this article are personal to the writer and do not reflect those of Exness or Leaprate.