Oil and gold markets on edge ahead of key economic releases

Oil and gold markets are poised for volatility as investors await crucial economic data that will set the tone for the short-term outlook.

Photo credit: istock (courtesy of Exness)

Oil and gold markets are poised for volatility as investors await crucial economic data that will set the tone for the short-term outlook. European flash inflation, US services PMI, FOMC minutes, and the US job report are all set to be released this week, potentially triggering significant price action.

"Investors are closely watching for any signs of a shift in the Federal Reserve's monetary policy or changes in the global economic landscape," Andreas Themistokleous, Exness Trading Specialist, commented.

The flash European inflation rate, expected to decline slightly for June, could weigh on the Euro. Meanwhile, the US services PMI is forecast to dip but still indicates continued expansion in the sector, potentially bolstering the Dollar.

All eyes will be on the FOMC minutes, where investors will scrutinise any hints from the Federal Reserve regarding future monetary policy decisions, particularly the timing of a potential rate cut.

"Gold is particularly sensitive to changes in interest rates and inflation expectations," adds Themistokleous. "A dovish Fed could be a boon for gold, while a hawkish stance could put downward pressure on prices."

Later in the week, Canada's unemployment rate is expected to see a minor increase, while the highly anticipated US job report will unveil the non-farm payrolls and unemployment rate data. A decline in NFP is anticipated, potentially putting downward pressure on the dollar.

Oil prices have been trading sideways recently, but the short-term outlook leans towards bearish sentiment unless a major catalyst emerges. Meanwhile, gold prices are grappling with uncertainty due to the unclear path of the Federal Reserve's rate cuts, mixed inflation data, and geopolitical tensions.

Technically, gold has been trading within a triangle formation for months, nearing the end of this pattern. A breakout from the triangle typically signals the short-term trend direction.

The contracting Bollinger Bands indicate low volatility, which is likely to increase after the breakout. The oscillator suggests that gold could move in either direction, adding to the anticipation surrounding the breakout.

For those looking to capitalize on these market movements, Exness, a leading broker in Kenya, offers the opportunity to trade CFDs on both gold and oil.

CFDs allow traders to speculate on the price movements of these commodities without owning the underlying asset. Trading CFDs does come with risks so it is important to have a strong risk management strategy in place.

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