The Fed’s interest rate cut bet is compounded by the tense situation in the Middle East, causing gold to rise by 1.6%, marking the largest single-day increase since mid-December; oil prices also rose by about 1%, with Brent briefly surpassing the USD 80 mark during trading.
After weak U.S. producer inflation data, escalating geopolitical tensions led to a decline in U.S. Treasury yields, driving an increase in gold prices before the weekend.
On Friday, gold climbed to a peak above USD 2060 per ounce during trading, with gold futures rising by USD 32.40, or 1.56%, closing at USD 2051.60 per ounce. Spot gold rose by 1%, closing at USD 2049.04 per ounce.
The U.S. and the U.K. launching airstrikes on Yemen further escalated tensions in the Red Sea, increasing the appeal of gold as a safe-haven investment.
Analysts noted that the airstrikes “clearly heightened the threat of tension in the Middle East and could even lead to more countries getting involved in the conflict.”
In addition, the decline in U.S. Treasury yields boosted gold as bets on the Federal Reserve making substantial interest rate cuts in March increased.
On the technical side, gold broke through the previous three highs during the week, surpassing the resistance at USD 2043 and experiencing strong upward oscillations.
It closed above the high point, rallying in the Asian, European, and American sessions. In the evening session, there was a second pullback testing and stabilizing around the USD 2044 level.
The bulls then accelerated upward, breaking through the USD 2062 level but facing pressure, leading to a retracement and oscillation at the close.
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 2060-2065.
- Key support levels to watch in the short term are around 2035-2030.
WTI Crude Oil >>
The tense situation in the Red Sea has further escalated as the UK and the US launched military strikes on targets controlled by Houthi rebels in Yemen, leading to an increase in oil prices. On Friday, US crude oil rose, briefly surpassing USD 75 per barrel during trading.
US crude oil increased by 66 cents, or 0.9%, closing at USD 72.68 per barrel; Brent crude oil broke through the $80 per barrel level during trading, rising by USD 0.88 per barrel, or 1.1%, closing at USD 78.29 per barrel.
Earlier in the week, concerns about supply were sparked by Saudi Arabia, the largest exporter, significantly reducing prices and an unexpected increase in US crude oil inventories.
The December CPI in the US showed inflation data still higher than expected, and the strengthening US dollar exerted pressure on oil prices.
Tensions between the US and Houthi militants have been escalating recently, and geopolitical factors continue to disrupt the market. Last week, Brent crude oil fell by a cumulative 0.5%, and US crude oil fell by a cumulative 1.1%.
On the technical side, oil prices experienced an initial rise followed by a decline. During the Asian and European sessions, they rallied strongly, breaking through the USD 73 level.
In the late US session, there was an accelerated upward movement, breaking through the USD 75 level and reaching around USD 75.2, but facing pressure, they quickly fell and fluctuated widely in the early morning, further suppressing a decline below the USD 73 level at the close.
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 74.0-75.0.
- Key support levels to monitor in the short term are around 71.0-70.0.
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