Gold and Oil Prices May Continue Bearish Momentum

BOE Statement Could have a Significant Effect

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OIL & GOLD OUTLOOK

  • Gold prices fell as the Fed cooled rate cut bets, validating topping cues
  • Crude oil prices testing three-month trend resistance near $60/bbl mark

Oil and gold prices fell as the Federal Reserve markets’ lowered the benchmark lending rate by 25bps, as expected. The WTI contract fell alongside stocks as rate cut bets evaporated, souring risk appetite.

More of the same may be ahead as the Bank of England issues its own policy decision. It will probably repeat concerns about slowing global growth even as it shies away from doing anything about them amid Brexit-linked uncertainty.

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GOLD TECHNICAL ANALYSIS

Gold prices pushed lower after a Bearish Engulfing candlestick pattern was printed coupled with negative MACD divergence. Price is currently trading on support levels of a corrective structure and this hints that the bias has shifted to favor the downside, putting a dense support bloc running down through 1346.75 in highlight. Invalidating bearish cues requires a daily close above the July 19 high at 1452.95 and within the corrective structure with a bullish candlestick formation.

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CRUDE OIL TECHNICAL ANALYSIS

Oil prices edged up to challenge resistance capping gains since late April. OIn the weekly TF we have broken the uptrend and are currently trading within a corrective bearish structure. The Daily TF shows that price is trading near resitance levels and a break on the 4H trend support will see prices move lower the bottom of the channel. A daily close above it and the 60.04-84 congestion area that follows immediately thereafter exposes the 63.59-64.43 zone. Alternatively, a break below support at 54.72 targets the 49.41-50.60 region.

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The Bank of England

The Bank of England is the central bank of the United Kingdom. It was established in 1694 and was privately owned in the beginning, the Bank was nationalized in 1946 so now is completely owned by the UK government. BOE’s main reason to be is to maintain monetary and financial stability in the country. Some of its other tasks are producing secure bank notes, operating asset purchase facility and keeping the inflation low and stable.

The European Central Bank (ECB)

The European Central Bank (ECB) is the central bank empowered to manage monetary policy for the Eurozone and maintain price stability so that the euro’s purchasing power is not eroded by inflation. The ECB aims to ensure that the year-on-year increase in consumer prices is less than, but close to 2% over the medium term. Another of its tasks is the one of controlling the money supply. The European Central Bank’s work is organized via the following decision-making bodies: the Executive Board, the Governing Council, and the General Council. Mario Draghi, a member of the Executive Board, is also the President of this organism.

The Federal Reserve Bank (Fed)

The Federal Reserve System (Fed) which is the central banking system of the United States. Fed has two main targets: to keep unemployment rate to their lowest possible levels and inflation around 2%. The Federal Reserve System’s structure is composed of the presidentially appointed Board of Governors, partially presidentially appointed Federal Open Market Committee (FOMC). The FOMC organizes 8 meetings in a year and reviews economic and financial conditions. Also determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth.

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