TECHNICAL ANALYSIS ON GOLD AND CRUDE OIL AHEAD OF THE NFP: TARGET PRICES TO ANTICIPATE.

 #OPINIONLEADER#

 ABSTRACT:

The prices of Gold and crude oil have been ranging after the previous falls last two weeks. The next big move on Gold and crude oil are largely dependent on the outcome of this week's NFP. A Bullish sentiment currently prevails at the market.

The price of gold has remained largely unchanged this week despite the weakness exhibited by the US Dollar. Last week the price of gold has rallied after a short fall when Fed Chair Jerome Powell informed the house that the inflation bill will be postponed till next giving the market a little relief and more confidence to buyers to invest more on Gold and oil. 

The Fed Chief has cited the labor market specifically, which seemed to imply that for now, inflation data will be thrown to the wayside.

Currently the markets obviously  have capitulated on this view especially as  Fed commentary is more keenly focused on job creation which will impact the rate of stored values in gold and commodities.

However, the market movement for Gold and Oil are keenly awaiting this week’s non-farm payrolls report, which will be released on Friday. It's  outlook will greatly determine the next movement particularly for gold, oil and commodity prices. 

According to a Bloomberg survey, analysts expect an addition of 875k jobs in July. That would see 25k more jobs added compared to June’s 850k figure. The same survey sees the unemployment rate dropping to 5.7% from 5.9%.

The Fed’s focus is on jobs, which makes this NFP report of particular importance to gold prices. This most likely, will result to an increased volatility in the market as the news has been a very positive one. Beyond the jobs data, markets will turn their eyes to the Jackson Hole Economic Symposium scheduled for August 26th - 28th where Mr. Powell is slated to speak once more. Many are expecting a potential signal on the Fed’s taper timeline. With this in mind, a miss on Friday’s numbers could feed the view that the Fed will hold off on announcing such a timeline.

Alternatively, a better-than-expected print could fuel hawkish bets, which would bode poorly for gold prices.

Equally, crude oil prices has fallen lower at the start of the new week. The drop comes amid demand-side worries, which were amplified at the start of the week when a purchasing managers’ index (PMI) showed a growth slowdown in Chinese manufacturing activity. That coincided with poor PMI data from other Asian economic hubs, including Thailand and Malaysia. But with the news of increased job creations to be announced ahead of the NFP on Friday, investors believe the prices of crude oil will surge again as more traders will definitely buy into the market.

GOLD TECHNICAL FORECAST:

Currently, Gold prices are trading closely below the 200-day Simple Moving Average (SMA). An area of congestion, which has affected prices on both the support and resistance side, appears to be proving a degree of support currently. A bullish move would need to clear the 200-day SMA before moving higher. On the downside, a major level could be the psychologically imposing 1800 level. We hope to see Gold break this level up to the second resistance at 1825 following the NFP.

CRUDE OIL TECHNICAL FORECAST

The price of crude oil has witnessed a significant pull back at the beginning of this week to the 50-day Simple Moving Average (SMA), which has offered a level of support earlier in the year. A degree of confluent support from the 38.2% Fibonacci retracement is seen on the daily chart. A move higher would turn the focus back to the 76.90 October 2018 high that the market has failed to maintain any higher region above it since last month. However, a Bullish sentiment is currently dominating the market. We expect prices to surge higher over the weekend.