Oil and Gold: Price review for the week ahead

This preview of weekly data examines USOIL and XAUUSD, with economic data expected later this week as the primary market drivers of the near-term outlook.

Highlights of the week: Chinese inflation, ECB decision, British GDP and US inflation

Tuesday

Chinese Balance of trade at 03:00 AM GMT, where the figure for August is expected to increase from $112.5 billion to $120.1 billion. If this is broadly accurate, then it might create some gains for the currency.

Wednesday

Chinese inflation rate at 01:30 AM GMT. The market is expecting this figure to increase by 0.4%, reaching 0.9% in August.

Thursday

European Central Bank Interest rate decision at 12:15 PM GMT. The market consensus is that the European Central Bank will proceed with a rate hike for the second time since August 2023, going from the current 2.40% to 2.65%. If expectations are met , the Euro might find support against other major currencies, while in the unlikely event of a rate cut, it might result in some losses in the short term. Investors and traders are also focused on the subsequent press conference following the release, which will provide hints about the monetary policy steps ahead.

US Producer Price Index (PPI) at 12:30 GMT. Market participants are expecting the figure to come out at 0.3% over 0% of the previous reading. If this is confirmed, then it could potentially hint at higher inflation figures in the coming months since higher producers' costs usually roll down to consumers, pushing inflation figures to the upside.

Friday

British GDP growth at 06:00 AM GMT, where the annualized figure is expected to drop from 1.1% to 1% and the monthly figure from 0.3% to 0%. If these expectations are confirmed, then the pound might witness some short-term losses against other currencies traded against.

US Inflation rate at 12:30 PM GMT, where expectations are for the figure to remain unchanged at 3.4% while core inflation is expected to decline by 0.1% for August. A worse-than-expected figure would most probably boost the scenario of hiking rates at the next meeting of the Fed, while a lower reading could support a more dovish stance and the probabilities of a stable rate could rise.

USOil, daily

Oil rose slightly as tensions around the Strait of Hormuz remained elevated. Iran said it was close to reaching an agreement with Oman on a new shipping route, while the US launched strikes on Iranian oil tankers in retaliation for attacks on US Navy vessels. Iran responded by threatening to establish a restricted zone around the waterway. The US also plans to maintain its naval blockade, keeping the risk of further supply disruptions high. Hedge funds have increased bullish positions, while traders warn that a broader escalation in shipping attacks could push oil prices significantly higher.

From a technical perspective, crude oil remains bullish on the daily chart, with price trading well above both the 50-day and 100-day moving averages and holding above the 50% weekly Fibonacci level around $86. The recent rally has pushed price toward the 61.8% Fibonacci resistance at $90, where it is currently consolidating. The Stochastic oscillator is around 89, indicating overbought conditions and suggesting that upside momentum may be losing steam. A clear break above $90 could open the way toward $96, while a rejection could bring a pullback toward $86, followed by the moving-average area around $83.

Gold-Dollar, daily

Gold extended its decline, falling below $4,450 as stronger-than-expected US jobs data increased expectations of a Fed rate hike at the September meeting. A stronger dollar and higher yields added further pressure, while rising Middle East tensions and higher oil prices increased inflation concerns. Markets are now awaiting US inflation data for further clues on Fed policy. Despite the short-term pressure, central-bank buying and renewed demand for gold as a hedge against inflation, currency debasement and fiscal risks continue to support the longer-term outlook.

From a technical point of view, gold remains in a medium-term bullish structure, with price holding above both the 50-day and 100-day moving averages and comfortably above the key 23.6% Fibonacci level at 4,300. However, the recent pullback from the 4,700 area has weakened momentum, with price currently consolidating below the 38.2% Fibonacci resistance at 4,500. The Stochastic oscillator is near the lower part of its range at around 31, suggesting bearish momentum has eased but has not yet produced a strong bullish signal. A break above 4,500 would strengthen the bullish outlook and open the way toward 4,660, while a move below 4,300 would weaken the current structure and expose lower support.