US-Iran tensions takes centre-stage | CMC Markets Daily Commentary
Gold price spiked to its highest level seen since 2013, fuelled by a drastic escalation in US-Iran tensions as the latter decided to abandon its nuclear deal commitments following the killing of a top Iranian commander by the US last week. Meanwhile, the Iraq parliament voted to end US troop presence in its country as two other men were also killed by the US air strike.
Technically, gold has broken out above a key resistance level at US$ 1,550 with strong upward momentum. RSI suggests the precious metal has been temporarily overbought and thus may face a technical pullback. This is, however, subject to the abating of geopolitical risks. Immediate resistance for gold can be found at US$ 1,590 area (50% Fibonacci Extension).
As a result of the sudden surge of geopolitical tensions, safe-havens and crude oil regained traders’ favour in a risk-adverse environment. Brent crude price hiked for a second day to US$ 70.7, its highest level seen since May 2019 and posits to climb higher should Middle East tensions ramp up further. Technically, Brent crude oil price has broken out a key resistance level at US$ 68.5 and its next resistance can be found at US$ 72.2 area.
Global equities face potential pullback from recent highs, led by US major indices. The S&P 500 index future is set to fall for a second day and Asian futures look for a lower opening on Monday. Technically, the MACD of S&P 500 index has formed a bearish ‘dead cross’ and the RSI is overbought. Its immediate support level can be found at 3,200 and then 3,176 (127.2% Fibonacci Extension).
Besides geopolitics, here are key economic data to watch out for this week:
– 6th January (Mon): Eurozone PMI Composite
– 7th January (Tue): Eurozone CPIs, US trade balance, US factory orders, US non-manufacturing PMIs
– 8th January (Wed): China trade balance, Germany Industrial Orders, EU consumer confidence, US ADP jobs, US DoE petroleum report
– 9th January (Thur): China CPI, EU employment, US unemployment claims
– 10th January (Fri): AU retail sales, China M2, Canada unemployment, US Non-farm payroll
Crude oil Brent – Cash
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