. Weekly Commodity Analysis - Middle East Calmness Plunges Oil, Gold Surges

Weekly Commodity Analysis – Middle East Calmness Plunges Oil, Gold Surges

Weekly Commodity Analysis – Middle East Calmness Plunges Oil, Gold Surges

04 Nov 2023

Introduction:

Oil prices have risen by 3% due to concerns about Middle East supply disruptions, with escalating tensions in Israel and Gaza causing global supply disruptions. This comes in the wake of events like the U.S. military targeting Iranian sites in Syria, leading to fluctuating oil prices in response to mediation talks between Hamas and Israel, led by Qatar and the U.S. In addition, gold has crossed the $2,000 per ounce mark as investors seek a hedge against potential conflict in Gaza. Meanwhile, XAG/USD has surged above $23.00 amid rising tensions in the Middle East, and natural gas prices exceeded the $3.00 per MMBtu level.

Brent Crude Oil:

Crude oil prices experience their second consecutive weekly decline as tensions in the Middle East ease.

On Friday, oil prices declined, marking a second consecutive week of losses, primarily due to reduced concerns about supply disruptions in the Middle East, which overshadowed the positive impact of a weaker dollar resulting from a disappointing monthly jobs report.

The two major crude oil benchmarks both experienced a 4% and 6% decrease, respectively, marking their second consecutive week of losses. This decline was primarily due to the Israel-Hamas conflict not escalating further, which alleviated concerns about potential disruptions to oil supplies in the Middle East.

Despite a decline of more than 1% in the US dollar following the release of data indicating that the U.S. economy added fewer jobs than anticipated last month, oil prices didn’t find much relief. This data increased the likelihood that the Federal Reserve won’t proceed with interest rate hikes.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 85.86 | Negative Crossover | Bearish
  • MA 20: 87.55 | Negative Crossover | Bearish
  • MA 50: 87.58| Negative Crossover | Bearish

Simple:

  • MA 5: 85.59 | Negative Crossover | Bearish
  • MA 20: 87.81 | Negative Crossover | Bearish
  • MA 50: 89.09 | Negative Crossover | Bearish

RSI (Relative Strength Index): 41.97| Neutral Zone | Neutral

Stochastic Oscillator: 11.97 | Sell Zone | Negative

Resistance And Support Levels:

  • R1: 88.77 | R2: 94.00
  • S1: 84.35 | S2: 78.52

Overall Sentiment: Bearish | Market Direction: Sell

Trade Suggestion: Stop Sell: 82.64 | Take Profit: 78.52 | Stop Loss: 85.96

Gold:

Gold price paddling just beneath $2,000.

Spot Gold prices are approaching the end of the week while trading within the middle range. XAU/USD exhibits a mixed performance due to the miss in US Nonfarm Payrolls (NFP). The short-term trend still appears to be favouring the upside.

On Friday, XAU/USD rose to an intraday peak, coming close to $2,005, following the most disappointing US Nonfarm Payrolls (NFP) report in nearly three years.

Despite the disappointing Nonfarm Payrolls (NFP) report, Gold faced challenges in achieving significant gains, as the preference for more stable metals persisted. While US data may be cooling, factors like inflation and rising wages continue to be significant for the Federal Reserve.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1989.64 | Positive Crossover | Bullish
  • MA 20: 1967.92| Positive Crossover | Bullish
  • MA 50: 1939.01 | Positive Crossover | Bullish

Simple:

  • MA 5: 1986.92| Positive Crossover | Bullish
  • MA 20: 1974.92| Positive Crossover | Bullish
  • MA 50: 1919.84 | Positive Crossover | Bullish

RSI (Relative Strength Index): 66.56 | Buy Zone | Bullish

Stochastic Oscillator: 17.55| Sell Zone | Negative

Resistance And Support Levels:

  • R1: 1995.60 | R2: 2048.76
  • S1: 1952.33 | S2: 1905.34

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 2006.73 | Take Profit: 2048.76 | Stop Loss: 1979.53.

Elsewhere In the Commodity Market.

Silver prices made a strong recovery, reaching $23.17, thanks to a more lenient U.S. labor market report. Natural gas futures surged on Friday, driven by increased liquefied natural gas (LNG) exports and the momentum generated by this week’s cold weather, which might have been sufficient to prompt the first withdrawal of the season.

Gold up (0.33%) at 1992.08, Silver up (1.99%) at 23.20, Palladium up (0.44%) at 1116.89, Platinum up (1.15%) at 930.06, Brent Crude Oil down (1.87%) at 85.23, WTI Crude Oil down (1.90%) at 80.89 as of writing time.

Key Economic Events & Data Release for Upcoming Week:

(USD) Fed Chair Powell Speaks (Wednesday).

(USD) Crude Oil Inventories (Wednesday)

(USD) Initial Jobless Claims (Thursday).