Gold’s price tumbles

Gold’s price tumbles as the USD strengthens and oil surges amid escalating tensions in Iran. Risk-off sentiment dominates markets, with investors eyeing Fed policy and inflation pressures closely.

USD on the rise, gold tumbles

The USD strengthened against its counterparts in the FX market during today’s Asian session.

As fewer high-impact financial releases are expected in the week, we expect fundamentals to lead the markets. The risk-off market sentiment is enhanced as the war in Iran does not seem to be de-escalating.

Yet market expectations for inflationary pressures in the US economy are intensifying, given the high oil prices. Hence, the market’s expectations for the Fed’s intentions are turning increasingly hawkish.

The bank is now increasingly expected to remain on hold and currently Fed Fund Futures imply that the market is split on whether the Fed will be hiking rates near the end of the year or not.

On the flip side, gold’s price tumbled at some point even as much as 8%, before correcting higher, after one of its worst weeks in decades.

Oil prices gain as war risks intensify

Oil prices were on the rise in today’s opening and during the Asian session. The war in Iran shows signs of escalating pushing oil prices higher. US President Trump has threatened to obliterate the Iranian energy plants.

The Iranian side is threatening to respond by hitting energy targets in the wider region. Such actions, if materialized, could have long-term consequences for the supply side of the international oil market.

US stock markets and Bitcoin lose ground

US equities were on the retreat during today’s Asian session, as the risk-off market sentiment intensified.

With the war in Iran being ongoing and expectations for inflation are present and the Fed expected to keep rates high. Hence riskier assets such as equities but also cryptocurrencies tend to suffer losses.

Other highlights for today

Today we get Euro Zone’s preliminary consumer sentiment for March while we also note that ECB’s Cipollone and Lane are scheduled to speak. In tomorrow’s Asian session, we get Japan’s CPI rates for February.

As for the rest of the week

On Tuesday, we get the preliminary March PMI figures of France, Germany, the Euro Zone as a whole, the UK and the US and the UK CBI distributive trades indicator for March.

On Wednesday, we get Australia’s and the UK’s CPI rates for February and Germany’s Ifo indicators for March. Also, on Thursday, we get Germany’s GfK consumer sentiment for April the weekly US initial jobless claims figure. Finaly on Friday, we get UK’s retail sales for February and the final US UoM consumer sentiment for March.

Charts to keep an eye out

XAU/USD

XAU/USD’s price continued to drop in today’s Asian session, breaking the 4250 (R1) support line now turned to support.

We intend to maintain our bearish outlook for the precious metal price, yet also note that it’s at oversold levels and possibly ripe for a correction higher.

Should the bears remain in control as expected, we may see gold’s price nearing if not breaching the 3890 (S1) support line.

For a bullish outlook to emerge, which we consider as remote currently, we would require gold’s price to break the 4250 (R1) resistance line and continue to break also the 4550 (R2) resistance level.

WTI

WTI’s price continued to rise on Friday and during today’s Asian session tested the 100.90 (R1) resistance line.

For the time being we note the bullish tendencies of WTI’s price, yet we still maintain our bias for a sideways motion of the commodity’s price.

Should the bulls be in the driver’s seat, we may see WTI’s price breaking the 100.90 (R1) resistance line and start actively aiming for the 107.00 (R2) resistance level.

For a bearish outlook we would require WTI’s price to reverse today’s and Friday’s gains and continue to break the 92.25 (S1) support line clearly and start aiming for the 87.10 (S2) support level.

XAU/USD Daily Chart

• Support: 3890 (S1), 3600 (S2), 3220 (S3)
• Resistance: 4250 (R1), 4550 (R2), 4995 (R3) 

WTI Daily Chart

• Support: 92.25 (S1), 87.10 (S2), 82.00 (S3)
• Resistance: 100.90 (R1), 107.00 (R2), 112.70 (R3) 

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