Two trades to watch: Gold, WTI Oil

Gold heads lower ahead of US non farm payroll, a strong print could boost bets that the Fed will move to taper support sooner. WTI oil rises but is set for its largest weekly decline since October as COVID fears drag.

Gold 5

Gold ahead of Non farm payrolls 

Gold prices are extending losses on Friday for a second straight session amid a stronger US Dollar. The precious metal is set to lose 0.7% so far this week.  

Demand for the US Dollar received a boost from Fed speakers this week who revived expectations of  the Federal Reserve normalizing monetary policy. 

The US Dollar was also receiving safe haven demand amid rising COVID delta cases both in the US and China. 

All eyes to the non farm payroll. Expectations are for 870k new jobs and the unemployment rate to tick lower to 5.7%. A stronger report could boost the prospect of a more hawkish Fed and see investors sellout of non-yielding gold. 

Read US NFP preview

Where next for Gold prices? 

Gold fell through is ascending trendline dating back to late June. It trades below its 50 and 200 sma on the daily chart and the 50 sma appears to be on track to cross below the 200 sma, a death cross, a bearish signal.  

The RSI is also pointing lower and in bearish territory favouring further downside. 

Immediate support can be seen at 1790 last week’s low. A break below here could open the door to a deeper selloff to 1750. 

On the upside, gold bulls must retake the ascending trendline resistance at 1805 in order to attack 1819 the 50 & 200 sma which could prove a tough nut to crack. 


Oil rises but set for heavy weekly losses 

Oil is on the rise but is heading for its largest weekly loss since October amid rising concerns over the delta covid variant. WTI trades down 6.5% across the week. 

Both the US & China, the two largest oil consumers in the world are experience a surge in covid cases. China has imposed travel restrictions in a bid to curb the spread of COVID. Whilst new daily cases in the US  are at the highest level in 6 months. 

Geopolitical tensions in the Middle East have offered some support to oil prices amid cross border hostilities between Iran & Israel. 

Baker Hughes rig count numbers due later today, in addition to non farm payrolls will be in focus. 

How to start trading oil

Where next for WTI oil prices?

WTI crude oil has sold off across the week finding support on the 100 sma at 6700 rebounding higher. The RSI is just below 50 but pointing higher supporting the rebound.  

Oil bulls will need to retake 70.00 psychological level and 7050 high 4 July in order to retake the 50 sma at 7150 and power higher. 

It would take a move below the 100 sma at 67.22 for sellers to gain traction and head towards 65.00 July 20 low. 

How to trade with City Index

Follow these easy steps to start trading with City Index today:

  1. Open a City Index account, or log-in if you’re already a customer.
  2. Search for the market you want to trade in our award-winning platform.
  3. Choose your position and size, and your stop and limit levels
  4. Place the trade.

Build your confidence risk free

More from Trade Ideas

Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.