Charts to watch this week – Gold and Oil gap up on Mid-East turmoil, US Dollar

Gold and Oil have unsurprisingly gapped higher on Mondays open after the weekend’s hostilities in the Middle East, Gold reclaiming it’s safe haven status and Oil opening 2% higher on supply problems from fears of a protracted and escalating conflict.

Geo-political events are looking to dominate the market narrative this week, though key US inflation figures will also play a big part, these are the charts I’ll be watching closely in the week ahead.

Gold

XAUUSD has had a rough two weeks as the relentless rise in US treasury yields and the Dollar has seen a steep drop in the precious metals price. Last week we did see strong support at the February and March support lows at 1811 USD an ounce, seeing a nice bounce on Friday which has followed through at today’s open, obviously propped up by its safe haven status after the weekend’s events.

Fibonacci levels from the Feb lows to the cycle high in May have played a big role in the decline as both resistance and support, the next level to watch to the upside will be the 78.6 Fib level at 1866, downside level to watch will be the aforementioned support at 1811. Fundamentals will also be a big driver of gold this week with any escalation in hostilities presumably supporting the upward move on haven flows.

Oil

WTI oil has gapped higher over 2% on Mondays open, Oil did find some support at the 78.6 Fib level on Friday after a bumper NFP report showing the resilience of the US labor market, though this morning gap higher was all about the hostilities in the Middle-East and fears of supply disruptions.

Technical levels will take a back seat to the fundamental news this week, an escalation in hostilities could see Oil restart the bull run that began in July before the recent overbought technical pullback we saw in September.

US Dollar

USD has a wild ride on Friday, initially rallying strongly on the Non-Farm Payroll beat, but ultimately paring gains as equity markets rallied. DXY did find good support at the upward trendline which has been established since the start of the bull run back in July, like Gold the USD safe haven status has seen DXY bounce strongly this morning. Fundamentals will also play a big part in USD direction this week, though key inflation figures in the PPI and more importantly CPI later in the week will also have a big effect with the market still split on whether the Fed will hike or hold at the next FOMC meeting on November 2.

The weeks Calendar below: