Key Events to Watch

• Thursday: US and Chinese CPI data – critical for Fed rate expectations
• Friday: Q1 US bank earnings – key to assessing trade war and recession sentiment
• Ongoing developments in the US-China trade war

Trade War Outlook

While some nations, like Japan, are seeking trade resolution with the US, the situation between China and the US continues to intensify. China’s recent retaliation—imposing 34% tariffs on US imports—was met with renewed threats from Trump, proposing 50% tariffs in response.

China countered with a bold statement, declaring its readiness to “fight to the last breath.”This exchange has sent global markets into risk-off mode, raising fears of a worldwide recession, inflation surges, and a potential expansion of conflicts beyond trade. Investors are watching closely—not only the US and China, but also Mexico, Canada, the Eurozone, and Asia—for key economic indicators that may validate or calm these concerns.

Gold Outlook

Gold remains anchored near the $3,000 level, caught between strong safe-haven demand and overbought momentum on higher timeframes. Current price action suggests a potential short-term pullback, especially if the metal breaks below key support at $2,950.The monthly RSI is approaching levels reminiscent of 2020 and 2008, signaling the risk of a steep—but possibly short-lived—reversal.

As long as geopolitical and economic uncertainties persist, any retracement may be seen as part of the broader bullish trend, offering long-term buying opportunities.

Crude Oil Outlook

Crude oil has fallen in tandem with broader market sentiment, pressured by recession fears, oversupply concerns, and persistent inflation risks. Prices are now retesting the psychological $60 level.While recent rebounds in US indices may be helping oil hold above this zone, any new catalyst indicating weaker demand or increased supply could push prices lower. On the flip side, if market sentiment improves, oil may rise in step with a broader recovery.

Thursday’s US and Chinese CPI reports will be crucial. If inflation cools, declining rate expectations could act as an economic stimulus—supportive for commodities. However, if there’s no shift in rate policy, economies may continue to feel the pinch.

Technical Analysis: Quantifying Uncertainties

Crude Oil Forecast: 3-Day Time Frame – Log Scale

Source: Tradingview

Crude oil remains within its long-term downtrend from the 2022 highs, respecting the bounds of a descending parallel channel. The latest bounce from the $60 zone aligns with the channel’s midline. A confirmed break below $60 could extend the decline toward $55, matching the 0.618 Fibonacci retracement of the 2020–2022 uptrend.

An extreme-case scenario could see prices fall to $49, near the channel’s lower bound.If $60 holds amid a broader market rebound, oil may retest resistance levels at $63.90, $65.50, $67.00, and $69.30. A solid break above $73 could revive bullish sentiment, but without it, the chart maintains a neutral to bearish tone, especially with ongoing recession and oversupply risks.

Gold Forecast: 3-Day Time Frame – Log Scale

Source: Tradingview

Gold is currently rebounding from the 0.618 Fibonacci retracement of the uptrend spanning from $2,830 (Feb 2025) to $3,167 (Apr 2025), with support holding above $2,955. A firm drop below this level could extend the retracement toward $2,900, $2,830, and $2,790.On the upside, a climb above $3,050 and $3,090 may open the path to a new record high at $3,200 and beyond.

Written by Razan Hilal, CMT

Follow on X: @Rh_waves