Gold Stable Amid Global Uncertainty, Oil Tumbles Over 2%

Market Overview

On Wednesday, gold briefly fell to $2,864.14 per ounce after hotter-than-expected US CPI data dampened rate cut expectations. However, concerns over Trump’s potential reciprocal tariffs fueled safe-haven demand, helping gold recover its losses and close 0.23% higher.

Meanwhile, oil prices ended a three-day winning streak, falling over 2% due to easing Russia-Ukraine tensions, rising US crude inventories, and Fed Chair Powell’s hawkish stance.

Gold Overview

Gold dropped early in the session after US January CPI data exceeded expectations, but safe-haven buying on tariff concerns helped it recover. Gold closed 0.23% higher at $2,903.86 per ounce.

Gold Market Drivers

Hotter-than-Expected US Inflation Data:
- CPI YoY: +3.0% (vs. 2.9% expected).
- CPI MoM: +0.5% (vs. 0.3% expected).
- Core CPI MoM: +0.4% (vs. 0.3% expected), YoY: +3.3%.
- The data pushed US Treasury yields higher and initially sent gold lower.
Powell’s Hawkish Testimony:
- Testifying before Congress, Fed Chair Jerome Powell reiterated that there is no urgency to cut rates, as inflation remains sticky.
- Market expectations for rate cuts have shifted:
  - Only one 25-basis-point cut is expected in 2024, now projected for December instead of September.
Safe-Haven Demand on Trade War Fears:
- Reports suggest that Trump’s administration may impose reciprocal tariffs on all exports to the US as soon as Thursday.
- This raised concerns over global trade tensions and potential inflationary pressures, fueling a V-shaped recovery in gold.
Key Events to Watch:
- US January PPI data.
- US Initial Jobless Claims.
- Updates on Trump’s new tariff policies.

Gold – Technical Analysis

Gold initially fell below $2,890 but rebounded sharply after testing support at $2,864.
During the US session, gold surged back above $2,900, closing near the session high.
Daily Chart: Formed a bullish reversal candle, signaling strong buying interest near key support levels.

Gold – Today’s Focus

Primary strategy: Buy on dips, sell on rebounds.
Resistance Levels: $2,920–$2,925.
Support Levels: $2,893–$2,888.

Oil Overview

Oil prices fell sharply, snapping a three-day rally, as multiple bearish factors weighed on the market.

Market Performance

WTI Crude (March): – $1.95 (-2.66%), closing at $71.37 per barrel.
Brent Crude (April): – $1.82 (-2.36%), closing at $75.18 per barrel.

Oil Market Drivers

Russia-Ukraine De-Escalation Signals:
- Trump held separate calls with Russian President Vladimir Putin and Ukrainian President Volodymyr Zelensky.
- Trump advocated for a ceasefire, while Putin signaled openness to a negotiated resolution.
- This eased supply concerns and pressured oil prices.
Rising US Crude Inventories:
- EIA data showed a larger-than-expected crude stock build, further weighing on prices.
- Gasoline inventories unexpectedly declined, while distillate stockpiles increased.
Powell’s Hawkish Stance & Rate Cut Repricing:
- Powell reiterated no urgency for rate cuts, reinforcing concerns over slower economic growth and weaker oil demand.
- OPEC’s Monthly Report warned that Trump’s proposed tariffs could increase market volatility and disrupt supply-demand balance.

Oil – Technical Analysis

WTI crude failed to break above $73, leading to a bearish reversal.
During the US session, oil extended losses, dropping below $72 and closing near $71.
Daily Chart: Formed a bearish engulfing pattern, signaling renewed downside pressure after a short-term rebound.

Oil – Today’s Focus

Primary strategy: Favor short positions on rebounds, with selective buying on dips.
Resistance Levels: $72.6–$73.1.
Support Levels: $70.0–$69.5.

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