Gold
On Wednesday, gold prices fell 1%, dropping below the significant $2300 level due to a stronger dollar and rising US Treasury yields, while traders awaited US inflation data to be released later this week.
Spot gold quickly declined by nearly $20 before the US session, hitting a two-week low and closing down 0.92% at $2298.01 per ounce.
The dollar rose by 0.4% on Wednesday, reaching a near two-month high of 106.13 and closing at 106.05, making gold more expensive for investors holding other currencies. The US 10-year Treasury yield also climbed to a two-week high.
Fed Governor Bowman stated that keeping policy rates unchanged for “some time” might be sufficient to control inflation but reiterated the willingness to raise borrowing costs if necessary.
The market’s next focus will be on the US Personal Consumption Expenditures (PCE) Price Index, due Friday, which is the Fed’s preferred inflation gauge. Investors are looking for signs of price pressures moving in the right direction. If the data comes in lower than expected, it could increase bets on a rate cut this year.
Gold Technical Analysis:
Yesterday, gold faced resistance at the $2323 level during the Asian and European sessions, leading to a weak downward trend. Although there was a brief rebound in the European session, it remained below $2320.
In the US session, gold faced further resistance at $2317, accelerating its decline and breaking below the $2300 level, ultimately closing weakly around $2293.
Today’s Focus:
- Short-term strategy: Favor shorting on rebounds and buying on pullbacks.
- Resistance: $2315-$2320
- Support: $2285-$2280
Oil
On Wednesday, despite an unexpected increase in US crude and gasoline supplies, concerns about the potential escalation of the Gaza conflict and its impact on Middle Eastern oil supplies supported oil prices.
WTI crude closed up 0.11% at $80.61 per barrel, while Brent crude closed up 0.83% at $84.43 per barrel.
Escalating tensions between Israel and Lebanon, which could spark a broader Middle Eastern conflict, supported oil prices. However, the unexpected increase in US crude and gasoline inventories, along with the dollar index rising to a near two-week high, exerted downward pressure on oil prices.
The market should be cautious of potential short-term topping in oil prices. The EIA report showed an increase of 3.6 million barrels in crude inventories, reaching 460.7 million barrels, against analyst expectations of a 2.9 million barrel decrease.
Oil Technical Analysis:
Yesterday, oil prices experienced volatility, initially surging and then facing resistance, leading to a downward trend. During the Asian and European sessions, prices saw a slight rebound.
However, in the US session, prices accelerated upward before facing resistance at the $81.6 level, falling back to break below the morning’s starting point of $80.6, and closing near $80.2 after a weak rebound.
Today’s Focus:
- Short-term strategy: Favor shorting on rebounds and buying on pullbacks.
- Resistance: $81.8-$82.3
- Support: $79.5-$79.0
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