On Monday, last week’s robust US jobs report reinforced expectations that the Federal Reserve will adopt a cautious approach to rate cuts this year. The US dollar remained strong, while the 10-year Treasury yield surged past 4.8%, marking its highest level since late 2023, putting pressure on gold prices, which fell nearly 1%. Meanwhile, crude oil extended Friday’s rally, rising close to 3% as markets anticipated tighter US sanctions on Russian oil, forcing buyers to seek alternative supplies.
Gold Market Overview
Gold prices faced downward pressure on Monday as strong US economic data pushed Treasury yields to new highs:
- Close: $2,663.57/oz (-0.98%)
- Intraday High: $2,690.00
Market Drivers
- Robust US Jobs Data:
- Last Friday’s employment report underscored the strength of the US economy, cementing expectations for cautious Fed rate cuts this year. Futures markets now predict a single 27-basis-point rate cut, likely in September or October.
- Dollar and Treasury Yields:
- The US Dollar Index briefly reached 110.17 before closing at 109.59 (-0.05%).
- The 10-year Treasury yield climbed to 4.8% during the session, supported by a strong labor market and persistent inflation.
- Geopolitical Developments:
- Progress in ceasefire talks between Israel and Hamas reduced safe-haven demand for gold. According to reports, Israeli and Hamas negotiators have made strides in ceasefire discussions.
Upcoming Data
This week, market focus will shift to key US economic reports, including:
- PPI Data: Scheduled for release today.
- CPI Data: Expected Wednesday.
These reports could offer additional clarity on the Fed’s rate-cut trajectory.
Technical Analysis of Gold
Gold broke below $2,670 during the US session, retreating to $2,656 before bouncing back slightly to close near $2,663.
- Daily Chart: Gold has been in a two-steps-forward, one-step-back uptrend. Despite Monday’s decline, the broader bullish trend remains intact.
Today’s Focus & Strategy
- Strategy: Look for buying opportunities on dips, with selling at resistance levels as a secondary option.
- Resistance: $2,680–$2,685
- Support: $2,655–$2,650
Crude Oil Market Overview
Crude oil prices surged nearly 3% on Monday, continuing last week’s rally, as markets anticipated tighter US sanctions on Russian oil:
- WTI February Futures: +$2.25 (+2.94%) to $78.82/barrel
- Brent March Futures: +$1.25 (+1.57%) to $81.01/barrel
Market Drivers
- Sanctions on Russian Oil:
- Analysts suggest stricter sanctions could disrupt Russian oil exports, forcing buyers like India to turn to other suppliers such as the Middle East and Africa, driving up prices.
- Market Performance:
- Both Brent and WTI hit their highest levels since August, entering overbought territory. Prices for near-month contracts rose over 6% in the past three sessions, pushing time spreads (near-month premiums over later contracts) to multi-month highs.
- Rising Trading Interest:
- Data showed record-high trading volumes:
- Brent Futures: Reached the highest level since March 2020.
- WTI Futures: Marked their busiest day since March 2022.
- Data showed record-high trading volumes:
Technical Analysis of Crude Oil
After a session of back-and-forth trading around $78, WTI briefly broke above $79.20 before retreating to close lower. The broader bullish trend remains intact, with support near the 5-day moving average at $76.
Today’s Focus & Strategy
- Strategy: Look for buying opportunities on pullbacks, with selling near resistance as a secondary approach.
- Resistance: $80.0–$80.5
- Support: $77.3–$76.8
Risk Disclosure
Securities, Futures, CFDs and other financial products involve high risks due to the fluctuation in the value and prices of the underlying financial instruments. Due to the adverse and unpredictable market movements, large losses exceeding your initial investment could incur within a short period of time.
Please make sure you fully understand the risks of trading with the respective financial instrument before engaging in any transactions with us. You should seek independent professional advice if you do not understand the risks explained herein.
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.
