Thursday Market Recap
Weaker-than-expected US retail sales and dovish Fed commentary sent the dollar and Treasury yields lower on Thursday, boosting gold, which briefly topped $2,720 before settling at $2,714.21/oz. Meanwhile, oil prices retreated as easing geopolitical tensions in the Middle East reduced the risk premium, with WTI February crude falling nearly 2%.
Gold Market Overview
U.S. retail sales, often referred to as the “scary data,” missed expectations, while dovish remarks from Federal Reserve officials further supported gold prices. Spot gold hit a high of $2,720/oz before closing up 0.66% at $2,714.21/oz.
Key Market Drivers
- Retail Sales Miss:
December retail sales rose 0.4% month-over-month, below the 0.8% (revised) gain in November. Core sales met expectations but reflected a slowing pace, raising questions about consumer demand resilience. - Dovish Fed Signals:
Fed Governor Christopher Waller noted that recent CPI data was encouraging, suggesting the Federal Open Market Committee (FOMC) could consider rate cuts by mid-2025, with March even being a possibility. - Market Reaction:
Futures markets now price in 43 basis points of cuts for 2025, up from 37 basis points earlier in the week. This pushed the dollar index down 0.15% to 108.93 and 10-year Treasury yields to 4.654%, their lowest since January 6.
Investors are also watching Treasury Secretary nominee Scott Bessent’s confirmation hearing, with expectations that his policies might alleviate inflation pressures from Trump administration trade measures.
Technical Outlook for Gold
Gold rebounded strongly from support at $2,690, breaking resistance at $2,710 and closing with a bullish candle. With three consecutive days of gains, the metal shows strong upward momentum.
Today’s Focus
- Strategy: Favor buying on dips and shorting on rallies.
- Key Levels:
- Resistance: $2,726-$2,731
- Support: $2,700-$2,695
Crude Oil Market Overview
Oil prices fell as Middle East tensions eased, causing some profit-taking after recent gains. WTI February crude dropped 1.7% to $78.68/bbl, and Brent March crude lost 0.9% to settle at $81.29/bbl after briefly dipping below $81.
Key Market Drivers
- Middle East Ceasefire:
Reports suggest Israel and Hamas reached a ceasefire agreement, with Houthi rebels expected to halt attacks on Red Sea shipping routes. This reduced geopolitical risk premiums. - Geopolitical Caution:
While regional tensions eased, Houthi leaders warned of resumed attacks if agreements are breached, keeping market participants cautious. - Oil Market Dynamics:
As Trump prepares to take office, his administration is reportedly exploring broad sanctions strategies and potential diplomatic moves involving Russia, Iran, and Venezuela, which could reshape the oil market landscape.
Technical Outlook for Crude Oil
WTI crude found support at $77 and staged a rebound above $78 by the close. Despite the pullback, the market remains in an upward trend, with technical indicators pointing to sustained buying interest.
Today’s Focus
- Strategy: Favor buying on dips and shorting near resistance.
- Key Levels:
- Resistance: $80.0-$80.5
- Support: $77.8-$77.3
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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.
