Gold Market Overview
On Wednesday, US Core CPI data came in below expectations, easing inflationary pressures and reigniting hopes for Federal Reserve rate cuts in 2025. This drove gold higher, nearing the $2,700/oz mark. By the close, gold was up 0.73%, settling at $2,696.41/oz. Early Thursday in Asian trading, spot gold crossed $2,700/oz for the first time in over a month.
Key Data Highlights
- December CPI rose 2.9% YoY, matching forecasts, and 0.4% MoM, slightly exceeding expectations.
- Core CPI decelerated to 3.2% YoY, its first drop in six months, and below forecasts of 3.4%. MoM, Core CPI grew 0.2%, also below expectations.
The report prompted traders to bring forward their expectations for the Federal Reserve’s first rate cut from September to July.
Market Dynamics
- The dollar index slipped 0.1%, hitting a one-week low of 108.59, closing at 109.10, boosting gold’s appeal for foreign buyers.
- U.S. 10-year Treasury yields fell 2.82%, marking their largest single-day drop since November 25, closing at 4.652%, reducing the opportunity cost of holding gold.
Market Outlook
Investors now turn to Thursday’s US retail sales data and initial jobless claims for further guidance on the Federal Reserve’s policy path.
Technical Analysis of Gold
Gold rallied strongly on Wednesday, bouncing off support at $2,669 during the European session and breaking through $2,680. It closed near its intraday high, signaling bullish momentum. Short-term indicators suggest continued upside potential, with key resistance at $2,710-$2,715 and support at $2,681-$2,676.
Today’s Strategy
- Primary: Buy on dips near $2,681-$2,676.
- Secondary: Sell on rallies near $2,710-$2,715.
Crude Oil Market Overview
WTI crude surged past $80/barrel for the first time since August, closing up 3.28% at $80.04/barrel, while Brent crude rose 2.64%, settling at $82.03/barrel.
Market Drivers
- U.S. Inventory Drawdown:
- The EIA reported a 2 million barrel decline in US crude inventories last week, far exceeding the expected 992,000-barrel drop.
- Gasoline and distillate stockpiles, however, rose more than anticipated.
- Geopolitical Risks:
- The U.S. imposed new sanctions on nearly 100 Russian entities, primarily in the banking and energy sectors, raising concerns about supply disruptions.
- The IEA highlighted potential supply disruptions from these sanctions in its latest oil market report.
- Weak Dollar:
- A softer dollar added to crude’s gains by making oil cheaper for holders of other currencies.
Headwinds
Reports of a potential ceasefire in Gaza tempered oil’s upward momentum, offering hope for regional stability.
Technical Analysis of Crude Oil
WTI crude rebounded from support at $76, surging through $78 during US trading hours and closing above $80. Indicators suggest a strong bullish trend, with resistance at $81.5-$82.0 and support at $79.0-$78.5.
Today’s Strategy
- Primary: Buy on pullbacks to $79.0-$78.5.
- Secondary: Sell near resistance at $81.5-$82.0.
Risk Disclosure
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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.
