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Gold and WTI are under pressure from the strong USD


Gold continued to push higher at the start of the week as the continuing US debt crisis gave bulls the confidence to continue buying. Recently there are even some bulls talking about Gold moving to $3,000. Slightly lower than expected US inflation data increased the likelihood of a pause in interest rate rises which is positive for Gold.

Resistance held at $2,050 midweek, signaling a price reversal, and as the USD strengthened Friday, Gold returned to the critical $2,000 level. Support held easily at $2,000 as buyers were keen, but the close below the 10-day moving average is bearish.

The week ahead sees US Retail Sales being the most important data release, with a strong number likely to put Gold under pressure. Of course, the week's most important news is Fed Chairman Powell's speech on Friday. While the Gold chart looks slightly bearish at the moment, the US debt problem continues, and many bulls are still expecting a return to range trading conditions in the week ahead.

Gold chart May 15

Resistance: 2032, 2050, 2080

Support: 2000, 1973, 1950, 1935, 1918, 1900


WTI tried to push higher last week, but worries about the US economy and strong resistance at $75.00 prevented the market from moving higher. In addition, economic data from China suggested the economy is not recovering as quickly as expected, dampening trader sentiment.

A move higher in the US dollar Friday resulted in more aggressive selling closing the market below the 10-day moving average, pointing to lower WTI prices. Positive news for WTI was the announcement that the US could repurchase oil for the Strategic Petroleum Reserve (SPR). While further losses are possible in the short term, we expect the market losses to be limited, and range trading is the better strategy in the week ahead.

WTI chart May 15

Resistance: 75.00, 79.00, 82.50

Support: 65.00, 64.00, 62.00