#XAUUSD (#Gold) & #WTI #CrudeOil Technical Analysis (6 December 2022)

Gold Forecast: Markets Get Crushed on Monday

We currently sit just above the 200-Day EMA, and it does suggest that we have pulled back enough that people may be looking to pick up a little bit of value.

• Gold markets initially tried to break above the $1800 level, but then got absolutely hammered during the trading session on Monday.
• We currently sit just above the 200-Day EMA, and it does suggest that we have pulled back enough that people may be looking to pick up a little bit of value.
• Whether or not we have enough momentum to turn things around is a completely different question, especially as we have seen interest rates rise quite sharply during the trading session on Monday.

Pay Close Attention to the Market

If we turn around a break above the top of the last couple of days, then we could go looking to the $1880 level. This would accompany interest rates falling, and therefore you need to pay close attention to the 10-year yield. Beyond that, you should also probably pay attention to the US dollar, but quite frankly it’s likely to follow right along with those interest rates anyways. The size of the bar for the day is of course negative, and rather impressive. By losing 1.6% or so for the day, this is a shot across the bow by sellers, but the 200-Day EMA does attract a lot of attention. Because of this, I will be paying close attention to this market over the next couple of days because it could very well offer an interesting opportunity.

If we were to break down below the 50-Day EMA, then it’s very likely that the gold market will get crushed over the longer term, with the idea of it going down to the $1640 level again. That obviously would need to see a huge amount of momentum in favor of the US dollar, which during the day on Monday at least, we have seen that return.

WTI Crude Oil Forecast: Gives Up Momentum Again

I do expect plenty of volatility, especially as we are heading toward the end of the year when liquidity tends to disappear.

• The West Texas Intermediate Crude Oil initially rallied during trading on Monday, but then gave up a lot of ground almost immediately.
• The $83.50 level continues to be a bit of a barrier, so this way I think it’s going to be difficult to imagine a scenario where we have enough momentum to take out that area in the short term.
• After all, OPEC has refused to cut output even further, so at this point, it looks like we go back to looking at the demand destruction that is almost certainly out there.

Expecting Plenty of Volatility

I do like the idea of fading short-term rallies because quite frankly I think we have seen such destruction in this market that simply “sell and hang on to the position” is probably going to be difficult. I do expect plenty of volatility, especially as we are heading toward the end of the year when liquidity tends to disappear. That tends to make very violent moves in this market, especially as so many algorithms are attached to the futures market. With this, it still looks like there is not an Apple event of the takeoff to the upside, and the lack of demand is going to continue to be a major issue going forward as the world is almost certainly heading into a huge recession.

Remember, oil was the “lifeblood” of the global economy, and if the economy is slowing down there’s just no need for it. Alternatively, if we start to see the economy pick up, then oil will be in high demand. Right now, all things are pointing south, but it must be said that a massive amount of selling pressure has already been in the market, so I’m not expecting some type of massive collapse here.

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