Gold Falls from Record High, Oil Rises to Two-Week Peak

Market Overview

On Tuesday, gold hit a record high of $2,942.60 per ounce before plunging over $40 intraday as investors took profits and Fed Chair Powell reaffirmed no urgency in adjusting interest rates. Gold settled at $2,897.23 per ounce, down 0.35%.

Meanwhile, oil prices extended their gains for the third straight session, reaching their highest close since January 28, fueled by ongoing geopolitical tensions.

Gold Overview

Gold surged to a record high of $2,942.60 per ounce on Tuesday before retreating over $40 intraday due to profit-taking and Fed policy signals. It closed at $2,897.23 per ounce, down 0.35%.

Gold Market Drivers

Profit-taking & Technical Correction:
- Jim Wyckoff, Senior Market Analyst at Kitco Metals, stated:”Some short-term futures traders took profits as recent gains appeared overextended, prompting a necessary pullback and technical consolidation.”
Fed Policy & Powell’s Testimony:
- At his first congressional hearing under Trump’s new term, Fed Chair Jerome Powell reaffirmed that the Fed is in no rush to cut rates.
- However, he emphasized that the Fed remains ready to act if inflation declines further or if the labor market weakens.
- On tariff uncertainty, Powell refrained from a direct response, stating that it’s too early to assess the economic impact, but acknowledged that higher tariffs could push up inflation.
Rate Cut Expectations Shift:
- Investors still expect a Fed rate cut this year, but expectations have scaled back to just one 25-basis-point cut, likely in H2 2024.
- Nationwide Chief Economist Kathy Bostjancic now predicts:”The Fed is likely to cut rates just once this year, given the evolving economic landscape.”
Key Event to Watch:
- The US CPI report is set to be released today.
- Market expectations: Core CPI MoM: +0.3% (prev: +0.2%), YoY: 3.1% (prev: 3.2%).
- Atlanta Fed President Raphael Bostic will also give an economic outlook speech.

Gold – Technical Analysis

Gold initially surged past $2,940 before encountering resistance and dropping below $2,900.
During the US session, gold tested $2,908 but failed to sustain gains, closing lower.
Daily Chart: Formed a bearish shooting star, signaling a potential short-term pullback.
Near-term support at the 10-day moving average ($2,850).

Gold Today’s Focus

Primary strategy: Buy on dips, sell on rebounds.
Resistance Levels: $2,920–$2,925.
Support Levels: $2,880–$2,875.

Oil Overview

Oil prices rose for the third consecutive day, closing at their highest level since January 28, driven by geopolitical tensions and supply concerns.

Oil Market Performance

WTI Crude (March): + $1.01 (+1.39%), closing at $73.32 per barrel.
Brent Crude (April): + $1.13 (+1.49%), closing at $77.00 per barrel.

Oil Market Drivers

Middle East Tensions Escalate:
- According to Xinhua News, Israeli Prime Minister Benjamin Netanyahu announced that:”If Hamas fails to release hostages by February 15, the ceasefire will end, and Israel will resume intense military operations until Hamas is defeated.”
- The announcement heightened market concerns about regional instability, driving oil prices higher.
Supply Constraints from Russia & Iran:
- US sanctions and geopolitical risks continued to limit Russian and Iranian crude supplies, supporting oil prices.
EIA Report & Supply Outlook:
- The US Energy Information Administration (EIA) released its Short-Term Energy Outlook, maintaining its 2025–2026 Brent crude price forecast.
- The report projects an oversupply of 1 million barrels per day by 2026, up from a previous estimate of 800,000 barrels per day.
Surging US Crude Inventories:
- API data showed a massive build of 9.04 million barrels last week, far exceeding analyst expectations of 2.6 million barrels.
- WTI crude briefly dipped after the report but rebounded as markets focused on broader supply concerns.
- Key Event to Watch:
  - EIA crude oil inventory data for the week ending February 7.

Oil – Technical Analysis

WTI crude held support at $72.50, rebounding strongly.
During the US session, oil spiked above $73.60 before retracing slightly.
Daily Chart: Formed a bullish continuation pattern, signaling further upside if oil stays above $73.
However, the larger trend remains in a bearish cycle, with long-term resistance still intact.

Oil – Today’s Focus

Primary strategy: Favor short positions on rebounds, with selective buying on dips.
Resistance Levels: $74.5–$75.0.
Support Levels: $72.2–$71.7.

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