Oil Continues Its Losses and Investors’ Attention is Turned to Gold!

The US economy added 517,000 jobs last month, the highest level since July last year, and the unemployment rate fell to 3.4%, its lowest level since 1969.

Gold prices fell, recording the lowest settlement price in 3 weeks, and at levels below $1,900 an ounce, on Friday, February 3rd, after the release of the monthly jobs report in America.

The US dollar index returned to achieve strong gains at the end of last week, supported by US job data that came much stronger than expectations with fluctuations in the stock markets. Mark Schneider, CEO of Nestlé International, revealed that his company will have to raise the prices of its food products further this year to compensate for the high production costs that were not transferred entirely to consumers.

Dollar index (USDX)

The dollar continued to rise on Monday after the strong US jobs report indicated that the Fed (the US central bank) may continue its monetary hawkish policy for a longer period. Meanwhile, the yen was hit by news that Bank of Japan Deputy Governor Masayoshi Amamiya would be next the governor.

The dollar touched its highest level in four weeks against a basket of currencies, recording 103.22.

The technical readings are positive. The positive intersection on the moving averages continues, with bullish support on momentum indicators, for the dollar index to settle above its pivot point at 102.35.

Pivot point: 102.35

Euro (EURUSD)

The euro-dollar pair declined on Friday, the third of February, from 1.0940 levels, for prices to settle near 1.0785 levels after the issuance of the monthly jobs report in America.

There are continuous negative technical readings, starting from the continuation of the negative intersections on the moving averages for the third session since last Thursday, as well as clear negativity on momentum indicators.

Pivot point: 1.0840

Spot Gold (XAUUSD)

Gold Newsletter Editor Bryn Lundin said that gold was hit on Friday by the positive jobs report which is a strong indication that the Fed still has more than one rate hike ahead.

He added: The yellow metal received a stronger hit than the stocks because it has been outperforming in the past few months.

Upon settlement, futures contracts for the yellow metal fell by $54.2, or 2.8%, recording $1876.60 an ounce, which is the lowest settlement price for the most active contract since January 10. Moreover, it also recorded the largest weekly loss since June 2021, by about 2.7%.

Technically, the negative readings on gold linked to the strength of the dollar are still continuing, but we must be careful that we need a daily closing below $1865 an ounce to adopt to the change in the general bullish trend that was present before the US jobs report.

Pivot point: 1,882

U.S. Crude (USOUSD)

OPEC Secretary-General Haitham Al-Ghais said on Monday, February 6, that the collective decision to cut production in October was a correct step, adding that the OPEC + alliance has historically played a constructive role in meeting additional demand and maintaining market balance.

“We believe there is great confidence in the OPEC + group and its decisions, as we have repeatedly demonstrated our readiness to act immediately and respond to the dynamic nature of the market,” Al-Ghais told Reuters on the sidelines of the Energy Week conference in India.

This came after the Executive Director of the International Energy Agency, Fatih Birol, said on Sunday that oil producers may have to reconsider their production policies after the recovery of demand in China, the second largest oil consumer in the world.

“If demand rises strongly and if the Chinese economy recovers, there will be a need, in my opinion, for OPEC + countries to reconsider their policies” related to production, Birol said.

Pivot point: 74.75