Gold, Crude Oil, and USD Outlook

Markets have experienced heightened volatility recently, driven by shifting expectations around Federal Reserve policy, economic data, and geopolitical developments.

Gold (XAU/USD) has seen strong bullish momentum but remains sensitive to macroeconomic shifts, while crude oil (WTI) has faced selling pressure amid concerns over supply and demand dynamics. The US Dollar’s strength continues to influence these key commodities, making upcoming data releases crucial for traders.

Additionally, GBP/USD has experienced notable price movements following recent comments from U.S. President Donald Trump regarding potential tariffs, adding further uncertainty to the currency market. All times mentioned in this report are in BST.

Gold (XAU/USD) Analysis: Volatility and Key Levels

Gold has experienced significant price swings, with an initial rally followed by a sharp pullback. The hourly chart highlights strong buying interest but also signals a potential resistance zone near recent highs. The key question remains whether gold can sustain its bullish momentum or if we are seeing early signs of exhaustion.

Recent Price Action and Key Observations:

· Uptrend Confirmation:?The rally from February 4th to early February 6th featured strong bullish candles with increasing volume, suggesting solid buying interest. This move was likely fuelled by safe-haven demand amid macroeconomic uncertainty.

· Volatility Spike:?A sharp pullback on February 6th saw gold retreat from recent highs, indicating profit-taking or a reaction to economic data. However, buyers quickly stepped in at lower levels, reinforcing bullish sentiment.

· Resistance at $2,890:?Gold faced selling pressure near the $2,890-$2,900 range, suggesting this level could act as a near-term resistance. A confirmed breakout above this zone could trigger further upside.

· Consolidation Phase:?Gold is currently stabilizing around $2,860-$2,870, which may indicate a period of accumulation before the next major move. Traders should watch for a decisive breakout or breakdown from this range.

Gold’s performance remains closely tied to Federal Reserve policy and the broader macroeconomic environment. The central bank’s stance on interest rates continues to be a major driver, with any indication of a prolonged hawkish policy potentially capping further gains. However, if the Fed signals a dovish shift or economic data weakens, gold could see renewed upside.

Additionally, persistent geopolitical tensions and inflation concerns continue to bolster safe-haven demand, providing a layer of support despite recent volatility. The inverse relationship between gold and the US Dollar also remains crucial; a weaker dollar due to soft economic data or changing Fed expectations could further enhance gold’s upward momentum.

Crude Oil (WTI) Analysis: Bearish Pressure with Signs of Stabilization

Crude oil prices have been under pressure, dropping sharply from the $73.70 region before finding support near $70.70. The market remains fragile, with traders closely watching for signals of stabilization or further downside.

Recent Price Action and Key Observations:

· Sharp Decline:?WTI saw aggressive selling pressure starting February 5th, with prices falling from $73.20 to below $71.00. This move was accompanied by strong bearish candles, signalling risk-off sentiment.

· Consolidation and Support:?After hitting a low near $70.80, WTI has entered a consolidation phase, trading between $71.00 and $71.60. This suggests a potential bottoming-out phase, but confirmation is needed.

· Lower Highs Formation:?Recent price action shows WTI forming lower highs, indicating continued bearish sentiment. However, a push above $72.00 could shift momentum.

Crude oil remains under pressure as supply-side dynamics continue to weigh on prices. Rising production from the US and increased inventory levels have contributed to the bearish trend, with any further build-up likely to accelerate declines.

On the demand side, concerns about slowing global economic growth persist, with weak economic data from major economies reinforcing fears of reduced oil consumption. However, geopolitical factors still pose potential upside risks. Unexpected OPEC+ production cuts or disruptions in major oil-producing regions could support prices, offsetting some of the recent weakness.

The balance between supply pressures and demand uncertainties will be key in determining the next major move in crude oil prices.

GBP/USD Analysis: Volatility Following Tariff Comments

GBP/USD has experienced increased volatility following recent remarks by Donald Trump regarding potential new tariffs. The uncertainty surrounding future trade policies has added pressure to the pound, while broader US Dollar strength continues to influence price action.

Recent Price Action and Key Observations:

· Strong Rally and Pullback:?GBP/USD initially saw a strong rally before reversing sharply, indicating heightened sensitivity to macroeconomic developments.

· Support at 1.2390:?Recent price action suggests buyers are stepping in around this level, but a break below could trigger further downside.

· Resistance Near 1.2480-1.2500:?The pair has struggled to maintain gains above this range, reinforcing it as a key resistance zone.

Trump’s comments regarding potential tariffs have created additional uncertainty for global trade, which could impact the UK economy and the broader forex market.

If such tariffs are implemented, they could exacerbate inflationary pressures, prompting a response from the Bank of England (BoE) and influencing monetary policy expectations. Additionally, traders should keep an eye on upcoming UK economic data, particularly inflation and GDP figures, as these will provide further clarity on GBP/USD direction.

Key Technical Levels to Watch

· Gold (XAU/USD):?Support at?$2,850?and?$2,820?will be key in maintaining bullish momentum, while resistance at?$2,890-$2,900?could cap further gains unless a breakout occurs, potentially pushing prices toward?$2,920. Traders should closely monitor US economic data and Federal Reserve commentary, as these will heavily influence gold’s next move.

· Crude Oil (WTI):?Support at $70.70?and?$70.00?remains crucial in preventing further downside, while resistance at?$72.00?and?$73.20?will determine if bullish momentum can return. A sustained break above?$72.00?could signal a shift in sentiment, whereas a move below?$70.70?may open the door for extended losses.

· GBP/USD:?Support at?1.2390?and?1.2350?will be key levels for buyers to defend, while resistance at?1.2480-1.2500?could limit upside potential. The pair’s direction will depend on evolving trade policy risks, Bank of England decisions, and Federal Reserve policy shifts.

Conclusion

Gold and crude oil have shown significant volatility, with gold maintaining an overall bullish bias while crude oil struggles to find direction. GBP/USD has also faced pressure amid trade policy uncertainty. The Federal Reserve’s stance on interest rates, potential shifts in trade policy, and upcoming economic data will be crucial in determining the next major moves for these markets. Traders should remain cautious and watch key levels for potential breakout signals.

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