Market Overview
On Thursday, US President Donald Trump addressed the World Economic Forum in Davos via video, calling on Saudi Arabia and OPEC to lower oil prices. He also stated that he would push for immediate interest rate cuts as oil prices drop. Following these remarks, gold prices rebounded from an intraday low of $2,735.96 but ultimately closed 0.05% lower. Meanwhile, oil prices plunged, with WTI crude futures falling more than 1%.
Gold Overview
Gold dipped to an intraday low of $2,735.96 during the pre-US market session on Thursday. However, weaker-than-expected US initial jobless claims data and President Trump’s call for rate cuts led to a softer dollar, helping gold recover most of its losses. By the close, gold had declined 0.05% to $2,754.52 per ounce.
Key Developments:
- President Trump used his Davos speech to pressure for lower oil prices and reiterated his demand for rate cuts. He criticized Federal Reserve Chair Jerome Powell’s judgment on rate policy and hinted at plans for a future conversation with Powell.
- In an interview, Trump stated:“I think I understand rates better than they do, and I’m confident I have better judgment than the people making those decisions.”
He also encouraged other nations to adopt similar measures to tackle global economic challenges.
Economic Data Impact:
- Initial jobless claims for the week ending January 18 rose to 223,000, the highest level in six weeks, exceeding expectations of 220,000 and a prior reading of 217,000.
- Continuing claims also hit a three-year high. This weaker labor market data contributed to a short-term gold price rally.
Looking Ahead:
The Federal Reserve will hold its first policy meeting of Trump’s current term next week. The CME FedWatch tool indicates a 98.9% probability of rates remaining unchanged during this meeting.
Technical Analysis for Gold
- Gold initially faced resistance at $2,757 and retreated to test support at $2,735 before rebounding in the evening session.
- It closed above $2,750, forming a daily candlestick pattern indicative of a recovery. Overall, gold remains in a strong bullish zone, with $2,730 identified as a critical support level.
Today’s Focus – Gold
- Strategy: Favor short positions on rebounds, with long positions on pullbacks as a secondary option.
- Resistance Levels: $2,765–$2,770.
- Support Levels: $2,740–$2,735.
Oil Overview
Oil prices plummeted on Thursday after Trump urged Saudi Arabia and OPEC to cut production costs.
- WTI Crude (March): Fell $0.82 (-1.1%) to $74.62 per barrel.
- Brent Crude (March): Dropped $0.71 (-0.9%) to $78.29 per barrel.
Key Developments:
At Davos, Trump asserted that lower oil prices could end the Russia-Ukraine conflict, claiming current high prices prolong the war.
- Clay Seigle, Senior Fellow at CSIS Energy Security, noted:“Trump’s call for lower oil prices will be welcomed by consumers and businesses, but the US oil industry and other global suppliers remain cautious.”
He added that while the energy sector advocates for increased investment in oil and gas projects, falling prices could hurt the viability of new ventures.
EIA Data:
- US crude inventories dropped by 1.017 million barrels last week, the lowest level since March 2022, but fell short of the expected 1.645 million barrels.
- Distillate stocks decreased, while gasoline stocks increased, adding pressure to oil prices.
Technical Analysis for Oil
- Oil attempted to rebound but faced resistance at $76, resuming its downward trend and breaking below the previous day’s low of $75.
- WTI crude ended near $74, forming a bearish daily candlestick and continuing its recent streak of declines.
Today’s Focus – Oil
- Strategy: Favor short positions on rebounds, with long positions on pullbacks as a secondary option.
- Resistance Levels: $75.4–$75.9.
- Support Levels: $73.0–$72.5.
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Disclaimer
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