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Gold Rallies and Oil Tests a Multi-Month Low

Mahmoud Alkudsi Mahmoud Alkudsi 08/09/2022
Gold Rallies and Oil Tests a Multi-Month Low Gold Rallies and Oil Tests a Multi-Month Low
Gold Rallies and Oil Tests a Multi-Month Low Mahmoud Alkudsi
 Released and Expected Data

The Japanese GDP (Q2) released today of 3.5% has come in higher than the expected of 2.9% while the Swiss unemployment data of August has come in line with expectations at 2.0%.
 
Markets expect the ECB interest rate decision today at 4:30 PM UAE time. The central bank could hike rates by 75 bp taking current levels from 0.5% to 1.25%. Investors will listen also to the ECB press conference of President Christine Lagarde at 6:15 PM and to the Fed chair’s speech at 5:10 PM.
 
Indices and Bonds Yield
 
The European and the US equity futures have stabilized awaiting the ECB and Fed head’s speeches today. Currently, these banks are trying to keep inflation levels in check without causing much damage to their economies and a further decline in oil prices will ease pressures on these banks.
 
The US 10-year bond yields rallied yesterday to a near three-month high nonetheless, the price retreated today as investors slowed down the bond’s selloff. The 10YY – 2YY spread remained around 20pb, indicating that the market believed that the Fed may continue hiking rates this year and cut them in the next year to save the US economy from a severe recession.
 
Major FX Currencies
 
The US dollar index rallied to a near 20-year high yesterday after Fed vice president Mrs Brainard vowed to hike rates to restrictive levels and maintain this policy for a while. It’s noteworthy that a high US Dollar price increases borrowing and importing costs in other economies and consequently feeding high inflation levels.
 
As for the Euro, investors await the ECB rates decision with inflation and growth forecasts for 2022 and 2023. The euro price would depend mainly on the ECB monetary policy and the European energy crisis. Tomorrow, the EU officials will meet in Brussels to address the energy shortage after Russia cut off gas supplies completely and indefinitely to Europe. The EU Commission will propose a price cap on Russian gas alongside the already imposed price cap on Russian oil.
 
Technically, the EUR/USD moves between 1.0000- 0.9700 trading zone and could be on the way to testing the lower end of the mentioned trading zone. On the other hand, in a daily close above the high end of the zone could send the price towards 1.0146 and 1.0334, respectively.
 
Commodities
 
The Gold price recovered this week some of last week's losses and steadied above the $1700/oz threshold. Given the inverse correlation of the gold price with the US dollar, it is unlikely to see any bullish move for gold at least until seeing the US inflation print of August next week.
 
Today, global oil prices tested a near eight-month low on increasing fears of a decline in demand from China, due to recent lockdowns to contain the spread of the Coronavirus.  The Brent crude price broke below $90pb despite the OPEC+ announcement of cutting crude output by 100K barrels from October. Today, markets wait for the US oil inventories at 7:00 pm UAE time.
Technically, a daily close of WTI below 80.00 could send the price 77.15 and 75.00 respectively, while its any close above 83.50 may encourage traders to rally the price towards 85.15 and 87.13 respectively.
 
Gold Daily Price Chart

Chart Source ThinkTrader

 
On August 25 the gold price corrected lower as created a lower high in 1765 and since then the precious metal started a downtrend momentum creating a lower high with a lower low. Currently, the price moves in the trading zone 1765-1685 hence a daily close below the low end of the zone could send the price towards 1629 however, the support levels at 1661 and 1645 should be monitored.
 
On the other hand, a daily close above 1720 could encourage traders to push towards 1765 however the resistance level at 1747 should be kept in focus.
 

 
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.

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Carl Capolingua
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Carl Capolingua
Market Analyst, Melbourne

Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions. Specialising in Australian and US stock markets in particular, Carl uses a top-down approach to assess the global macro picture before using both technical and fundamental techniques to select stocks. He regularly appears as an expert commentator on a number of media outlets throughout the Asia-Pacific region.
 
 
 

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Lesego Mthombothi
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Lesego Mthombothi is an experienced market research analyst and investment professional who proudly holds an honours degree in investment management and completed her CFA level 1.
 
 
 

Mahmoud Alkudsi
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Mahmoud Alkudsi
Chief Markets Analyst, MENA

Mahmoud is a market analyst, with over a decade of experience in financial markets. He follows main market movers and tracks their effect on the price chart. Mahmoud mixes technical and fundamental tools with a deeper focus on the technical side, and with his wide experience in providing educational and guidance materials to all levels of traders, he helps them in making informed trading decisions. Before joining ThinkMarkets, Mahmoud was head of market research departments in different reputed financial companies, where he provided market analysis for a variety of asset classes, including FX, equities, indices, and commodity futures. As an experienced market commentator, he was hosted by too many print and broadcast media, including not limited to Sky News Arabia, France 24, Alarabyia, Alsharq-Bloomberg, and CNBC Alarabyia to discuss key risk events their clear impact on the price action. Mahmoud holds a Master of Business Administration (MBA) from Cardiff Metropolitan University of Wales, UK, and speaks Arabic, English, and Spanish.

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Shawn Lee
Market Analyst, Malaysia

Shawn Lee has over eight years of experience in the financial market as a market analyst. Shawn provides market key insights and trade ideas through the market and technical analysis. He also held trader roles and guided traders in maximising one’s trading success.

Carl Capolingua
Carl Capolingua
Carl has over 20 years' experience in financial markets and has held senior analyst roles at a number of financial institutions.
Lesego
Lesego Mthombothi
Lesego Mthombothi is an experienced market research analyst and investment professional who proudly holds an honours degree in investment management and completed her CFA level 1.
Mahmoud Alkudsi
Mahmoud Alkudsi
Mahmoud is a market analyst with over a decade of experience in financial markets. Mahmoud mixes technical and fundamental tools with a deeper focus on the technical side, and has experience in providing guidance to all levels of traders.
Shawn
Shawn Lee
Shawn Lee has over eight years of experience in the financial market as a market analyst. Shawn provides market key insights and trade ideas through the market and technical analysis. He also held trader roles and guided traders in maximising one’s trading success.
Any opinions, news, research, analyses, prices or other information contained on this website is provided as general market commentary and does not constitute investment advice. ThinkMarkets will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
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