US August ISM Manufacturing Index remained in contraction territory for the fifth consecutive month, limiting the dollar’s gains and allowing gold to recover after testing $2,473.36 per ounce.

Meanwhile, geopolitical shifts in the Middle East and a potential resolution of the Libya conflict, coupled with weak US summer driving demand, led to a sharp drop in WTI and Brent crude prices, wiping out all gains for the year.

Gold

Gold prices dipped to a one-week low of $2,473.36 per ounce due to a strong US dollar performance. However, later in the day, the US August ISM Manufacturing Index showed contraction for the fifth month in a row, and the August Markit Manufacturing PMI final reading fell short of expectations, raising market concerns.

This led to a broad decline in US Treasury yields, limiting the dollar’s gains and providing gold with renewed upward momentum. By the end of the session, gold’s losses narrowed to 0.26%, closing at $2,492.89 per ounce.

IG analyst Jun Rong Yeap noted in a report that investors are waiting for a series of key economic data releases this week, which will guide the debate on the scale and pace of the Federal Reserve’s easing policy.

Prices may enter a short-term consolidation mode. For now, gold bulls are hoping for weaker US economic data this week to support future easing by the Fed, but not so weak that it reignites recession fears.

Investors should watch the US July JOLTS job openings data today and continue to monitor the US August ADP employment changes and non-farm payroll reports later this week.

Gold Technical Analysis:

During the Asian and European sessions, gold repeatedly tested the $2,506 resistance level but faced strong selling pressure, leading to a sharp decline.

The US session saw the price break below the $2,490 and $2,480 support levels, with the daily candlestick closing in a bearish pattern. However, gold rebounded sharply from the $2,477 support overnight, indicating a high likelihood of continued range-bound trading in the near term.

Today’s Focus:

For today’s strategy, consider selling around the $2,520-15 resistance area, with cautious buying around the $2,470-75 support zone.

• Key Resistance: $2,550-$2,545
• Key Support: $2,440-$2,430

Oil

Geopolitical developments in the Middle East suggested a potential resolution to the Libya conflict, and weak US summer driving demand led to a sharp decline in WTI and Brent crude prices, erasing all gains for the year.

Brent crude futures fell by $3.77, or 4.9%, to $73.75 per barrel, the lowest level since December 12. US crude futures dropped by $3.21, or 4.4%, to $70.34 per barrel, also the lowest since December.

Bloomberg reported that Libya’s central bank governor, Sadiq Al-Kabir, indicated on Tuesday that there are “strong” signs that political factions are close to an agreement to break the current deadlock.

Reconciliation between Libya’s rival governments would pave the way for over 500,000 barrels per day of oil supply to return to the global market.

In addition, weak US summer driving demand has drawn market attention. US gasoline futures plummeted on this news, putting further pressure on crude prices.

It is worth noting for investors that due to the US public holiday on Monday, the API crude inventory data, usually released early Wednesday morning Beijing time, is postponed to Thursday morning. Similarly, the EIA crude inventory data, usually released on Wednesday, is delayed to midnight on Friday.

Oil Technical Analysis:

On Monday, US crude oil opened at $74.46 per barrel, initially rose slightly to $74.82, then sharply retreated.

During the US session, the price broke below the lower support of the current triangle consolidation and accelerated downward, hitting a daily low of $70.59 before stabilizing. The daily candle closed at $70.69 with a long upper shadow, suggesting continued bearish pressure.

Today’s Focus:

For today’s strategy, consider focusing on selling on rallies while looking for cautious buying opportunities on dips.

• Key Resistance: $71.5-$72.2
• Key Support: $69.5-$69.0

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Disclaimer
This information contained in this blog is for general reference only and is not intended as investment advice, a recommendation, an offer, or an invitation to buy or sell any financial instruments. It does not consider any specific recipient’s investment objectives or financial situation. Past performance references are not reliable indicators of future performance. Doo Prime and its affiliates make no representations or warranties about the accuracy or completeness of this information and accept no liability for any losses or damages resulting from its use or from any investments made based on it. 
The above strategies reflect only the analysts’ opinions and are for reference only. They should not be used or considered as the basis for any trading decisions or as an invitation to engage in any transaction. Doo Prime does not guarantee the accuracy or completeness of this report and assumes no responsibility for any losses resulting from the use of this report. Do not rely on this report to replace your independent judgment. The market is risky, and investments should be made with caution.