. Weekly Commodity Analysis - Oil plunges 5% as Gold Soars

Weekly Commodity Analysis – Oil plunges 5% as Gold Soars

Weekly Commodity Analysis – Oil plunges 5% as Gold Soars

21 Oct 2023

Introduction:

In the commodity market, oil prices dipped as Hamas released US hostages, potentially easing concerns about a broader Middle East conflict. Meanwhile, gold surged to a five-month high at $1,990, driven by Middle East tensions and the Federal Reserve’s interest rate policy. Silver (XAG/USD) remains above $23, supported by various factors, and the natural gas market experienced a significant decline during the trading week.

Brent Crude Oil:

Oil drops after Hamas releases US hostages.

Oil prices closed lower on Friday following the release of two U.S. hostages by the Islamist group Hamas in Gaza. This development raised hopes that the Israeli-Palestinian crisis might de-escalate without spreading to the broader Middle East region, potentially disrupting oil supplies.

Both oil contracts had increased by more than one dollar per barrel earlier in the session due to signs of an escalating conflict. For the week, both front-month contracts recorded a second consecutive weekly increase of over 1%.

The market continues to closely monitor the Middle East due to concerns about a potential region-wide conflict that could disrupt oil supplies.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 90.42 | Positive Crossover | Bullish
  • MA 20: 89.27 | Positive Crossover | Bullish
  • MA 50: 87.99| Positive Crossover | Bullish

Simple:

  • MA 5: 90.45 | Positive Crossover | Bullish
  • MA 20: 89.18 | Positive Crossover | Bullish
  • MA 50: 88.47 | Positive Crossover | Bullish

    RSI (Relative Strength Index): 56.23| Buying Zone | Bullish

Stochastic Oscillator: 93.41 | Buy Zone | Bullish

Resistance And Support Levels:

  • R1: 91.82 | R2: 97.83
  • S1: 87.77 | S2: 83.84

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 93.78 | Take Profit: 97.83 | Stop Loss: 91.36

Gold:

Gold gathers bullish momentum, and tests $1,900.

Gold’s weekly rally continued, reaching the $1,990 range for the first time in five months on Friday. The XAU/USD pair is still benefiting from an influx of safe-haven investments as investors seek to reduce their exposure to risk. Additionally, the decline in U.S. yields is contributing to this uptrend.

The surge in gold prices (XAU/USD) can be attributed to escalating tensions in the Middle East and Federal Reserve Chair Jerome Powell’s endorsement of a stable interest rate policy in his Thursday speech. With Israeli troops preparing to enter the Gaza Strip with the aim of dismantling Hamas, the Palestinian military group, demand for gold has further strengthened.

Technical Overview:

Moving Averages:

Exponential:

  • MA 5: 1962.74 | Positive Crossover | Bullish
  • MA 20: 1913.49 | Positive Crossover | Bullish
  • MA 50: 1905.92 | Positive Crossover | Bullish

Simple:

  • MA 5: 1960.94| Positive Crossover | Bullish
  • MA 20: 1885.06| Positive Crossover | Bullish
  • MA 50: 1904.74 | Positive Crossover | Bullish

    RSI (Relative Strength Index): 74.05 | Buy Zone | Bullish

Stochastic Oscillator: 100.00| Buy Zone | Neutral

Resistance And Support Levels:

  • R1: 1986.84 | R2: 2051.72
  • S1: 1943.06 | S2: 1886.29

Overall Sentiment: Bullish | Market Direction: Buy

Trade Suggestion: Stop Buy: 2009.55 | Take Profit: 2051.72 | Stop Loss: 1978.74.

Elsewhere In the Commodity Market.

XAG/USD stabilizes above $23, supported by multiple tailwinds. The natural gas market has fallen rather significantly during the trading week.

Gold is up (0.39%) at 1980.90, Silver is up (1.04%) at 23.35, Palladium is down (1.28%) at 1099.26, Platinum is up (0.62%) at 894.50, Brent Crude Oil is up (0.14%) at 92.51, WTI Crude Oil down (0.90%) at 88.29 as of writing time.

Key Economic Events & Data Release for Upcoming Week:

(USD) Fed Chair Powell Speaks (Thursday)

(EUR) ECB Interest Rate Decision (Oct) (Thursday).

(USD) GDP (QoQ) (Q3) (Thursday)

(USD) Initial Jobless Claims (Thursday)

(EUR) ECB Press Conference (Thursday)