Soft U.S. inflation data triggered more bets on an early interest rate cut in March 2024, causing the U.S. dollar to fall to a near five-month low, and gold prices to rise.  

Concerns about the Red Sea conflict and the anticipation of a rate cut further fueled a more than 2% increase in oil prices, reaching a new four-week high. 

Gold >> 

On Tuesday, gold saw a significant increase in the past few trading days as the preferred inflation gauge of the Federal Reserve, the PCE index, fell below expectations. Gold futures closed up 0.03%, at USD 2069.8 per ounce. Spot gold also rose by 0.73%, closing at USD 2067.77 per ounce. 

Following the dovish signals from the Federal Reserve during its last meeting in 2023, the release of inflation data has increased hopes that the central bank might start cutting interest rates as early as March 2024.  

The FedWatch tool on the CME indicates that traders estimate a likelihood of over 70% for a 25-basis-point rate cut in March 2024.  

On Tuesday, the U.S. dollar fell to a near five-month low, U.S. Treasury yields plummeted, and spot gold broke through the trading range of USD 2000 to USD 2050 per ounce that had been established for most of December.  

Currently, it is less than USD 50 per ounce away from the historical high of above USD 2130 per ounce reached earlier this month. The technical aspect of gold remained strong in the volatile trading, with the opening price in the Asia-Europe session quickly rising above the USD 2053 level.  

It then showed a strong upward trend, but during the afternoon session, it struggled below USD 2065, entering a sideways oscillation. In the late U.S. session, there was a second surge but faced resistance around the USD 2064 level, leading to a retracement.  

Early morning saw gold prices test the USD 2056 level again before stabilizing and strengthening. The closing price broke above the USD 2065 level, reaching around USD 2068, marking the day’s highest point. 

Technical Analysis: 

Today’s short-term strategy for gold suggests prioritizing short positions during rebounds, with long positions considered as a secondary approach during pullbacks. 

• Key resistance levels to watch in the short term are around 2075-2080. 
• Key support levels to watch in the short term are around 2055-2050. 

WTI Crude Oil >> 

On Tuesday, due to concerns about the Red Sea conflict and a warming market expectation of an early interest rate cut, oil prices rose by over 2%. U.S. crude oil closed at USD 75.57 per barrel, up 2.73% or $2.01 per barrel, reaching a near four-week high of USD 76.16 per barrel at one point during the session.  

Brent crude oil closed at USD 81.07 per barrel, up 2.53% or USD 2 per barrel, and at one point during the session, it rose by 3.4%. In the thinly traded market due to the holiday closure, this upward momentum further propelled the approximately 3% gain from last week, marking the largest weekly increase since October of the previous year. 

On the technical side, oil prices in the Asia-Europe session experienced repeated fluctuations around the USD 73 level, eventually welcoming a strong rebound after oscillating.  

They broke through the previous high and closed higher. In the late U.S. session, there was a strong rebound around the USD 74 level, followed by an accelerated rise, breaking through the USD 76.1 level and closing strongly. 

Technical Analysis: 

Today’s crude oil trading strategy suggests prioritizing short positions during rebounds, with long positions considered as a secondary approach during pullbacks. 

• Key resistance levels to monitor in the short term are around 76.0-77.0. 
• Key support levels to monitor in the short term are around 73.0-72.0. 

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