Weekly data: USOIL & Gold price action

This preview of weekly data looks at USOIL and XAUUSD, where economic data coming up this week are the main drivers for the near short-term outlook.  The most important economic data for this week are: Federal Open Market Committee (FOMC) minutes on Wednesday at 06:00 PM GMT. This publication is important for understanding the odds of an interest rate hike in the next Federal Reserve meeting. The consensus is around a single hike, but the main debate about further monetary tightening is whether it will continue or not. Currently, market participants are pricing in the probability of another hike in the July meeting at 89%, according to the Fedwatch tool. 

Australian & American balance of trade on Thursday at 1:30 AM & 12:30 PM GMT respectively. The Australian figure is expected to decline to A$10.5 billion while the American figure is expected to rise to $-69.5 billion from $-74.6 billion on the previous reading. This could affect the 2 currencies but only slightly, since the data is for May, which might already be priced in the market. 

US Services PMI on Thursday at 14:00 GMT.  Expectations are for a rise of around 0.7 points, indicating that the U.S. services sector is expanding, since the figure is generally expected to remain above the 50 point mark. This data is for June and is positive news for the dollar. So we might see some gains against its pairs. 

US job report on Friday at 12:30 PM GMT. The NFP is expected to come in at around 225,000 against the previous release of 339,000 and unemployment in the U.S. is expected to remain static at 3.7%. If these expectations are correct, we might see the dollar move down in various pairs and against gold in the near future after the release. 

USOIL, daily

Oil prices are on the rise after Saudi Arabia and Russia announced supply cuts for August. Saudi Arabia extended its voluntary production cut of one million barrels per day (bpd) for another month, while Russia will reduce exports by 500,000 bpd. Both countries are trying to prop up prices, which have dropped due economic slowdown concerns and ample supplies from major producers. On the other hand, fears of a global economic slowdown and potential U.S. interest rate rises continue to limit gains. Eurozone manufacturing activity shrank faster than expected in June, with concerns over a slowdown in fuel demand growing. 

On the technical side, the price has been trading in a declining triangle formation for the last two months and is currently trading very close to the upper boundary of the triangle, possibly indicating a correction to the downside. The Stochastic oscillator is not indicating any overbought or oversold levels but is pretty close to extreme overbought levels. The 50-day moving average is still trading well below the 100-day moving average, indicating that the bears are still in charge. If the upper boundary of the triangle proves to be strong resistance, then that bearish narrative could be reinforced in the near short term. 

 XAUUSD, daily

Gold prices fell on Monday after a rise in the dollar index and increase in the 10-year U.S. Treasury yields, which are also contributing to the decline in gold prices. Investors are eagerly awaiting U.S. non-farm payrolls data and minutes from the latest Federal Reserve meeting later this week, both major publications expected to create volatility in the market. Unchanged U.S. consumer spending in May suggests that the Fed's rate hikes to control inflation are gradually working. But despite this, it is too early to suggest that the Fed will consider rate cuts any time this year.

High interest rates discourage investment in gold, while investors predict an 89% chance of a 25-basis point rate hike in July according to the Fedwatch tool. 

From a technical standpoint, the price has found support at the $1900 level, which is made up of the lower of the Bollinger bands, the 61.8% of the weekly Fibonacci retracement level, and the psychological support of the round number. At the time writing, the price is trading just above the Fibonacci level while the Stochastic oscillator is not indicating any overbought or oversold levels, meaning that the price could head in either direction. On the other hand, the 50-day moving average recently crossed below the slower 100-day moving average, possibly signaling that the overall bearish trend is still in effect.