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Fed Likely To Proceed With One More Rate Hike; Gold Rebounds And Oil Prices Rise For Third Consecutive Day


U.S. Dollar dropped to its lowest level in over a year on Wednesday, as data showed a slowdown in U.S. Consumer Price Inflation (CPI) for June. This suggests that the Federal Reserve may only need to raise interest rates one more time this year.  

As a result, gold surged by over 1%, and oil prices reached a two-month high, with Brent crude futures hitting a new high since May. 

Gold>>

Gold jumped over 1% on Wednesday as U.S. June CPI data revealed the lowest inflation rate in over two years. Despite hawkish remarks from Federal Reserve officials Bostic and Kashkari, the U.S. Dollar index continued to decline, attracting investor attention to spot gold as a safe-haven asset, leading to a strong rally. 

Following the release of the U.S. June CPI data, spot gold swiftly rose by $20 to reach a high of $1954.79. Supported by the level of $1933, gold experienced a robust ascent, breaking through the high close at $1940. 

During the Asian and European sessions, it made a slight breakthrough above the resistance level at $1940, then retreated under pressure and subsequently rallied again in response to the CPI news.  

With the stimulus from the data, the resistance at the $1940 level was easily breached, leading to a rapid push toward the $1950 level before a minor pullback to around $1940.  

Following the breakthrough, a new phase of consolidation began, and the upper limit of the rebound in the evening session is expected to be in the range of $1960 to $1965. 

Technical Analysis: 

For short-term trading in gold today, the main strategy is to focus on buying during pullbacks, with selling on rebounds as a secondary approach.  

  • Key resistance levels to monitor in the short term are around 1965-1970. 
  • Key support levels to monitor in the short term are around 1935-1930. 

WTI Crude Oil>>

Oil prices benefited from the decline of the U.S. Dollar to a two-month low, with Brent crude futures reaching a new high since early May, surpassing $80 per barrel for the first time. The U.S. Energy Information Administration (EIA) lowered its forecast for U.S. crude oil production this year.  

Optimistic demand expectations and supply cuts by major oil-exporting countries have contributed to the strong upward momentum in oil prices. During Wednesday’s U.S. trading session, WTI crude oil traded near $75.7 per barrel and remained stable. 

The EIA has revised its forecast for U.S. crude oil production in 2023 by 50,000 barrels per day. Previously, the Organization of the Petroleum Exporting Countries (OPEC) and its allies in the OPEC+ alliance announced an extension of the production cut agreement until the end of 2024.  

The EIA expects global demand to exceed supply by approximately 100,000 barrels per day in 2023 and by over 200,000 barrels per day in 2024.  

The International Energy Agency (IEA) stated that the oil market will remain tight in the second half of 2023, driven by strong demand from emerging economies such as China, coupled with recent supply cuts announced by major exporting countries like Saudi Arabia and Russia. 

On Wednesday, oil prices continued their bullish and strong upward trend. After a slight retreat during the Asian-European session, prices found support near the $74.7 level and experienced a powerful rally by the bulls, breaking above the $75.2 level in the afternoon and closing near the $76 level. 

Technical Analysis: 

For short-term trading strategies today, it is advisable to focus on buying on pullbacks and selling on rebounds.  

  • Key resistance levels to watch in the upper range are between 77.0 and 77.6. 
  • Key support levels to monitor in the lower range are between 74.5 and 74.0. 

Forward-looking Statements    
This article contains “forward-looking statements” and may be identified by the use of forward-looking terminology such as “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “hope”, “intend”, “may”, “might”, “plan”, “potential”, “predict”, “should”, or “will”, or other variations thereon or comparable terminology. However, the absence of such terminology does not mean that a statement is not forward-looking. In particular, statements about the expectations, beliefs, plans, objectives, assumptions, future events, or future performance of Doo Prime will be generally assumed as forward-looking statements.     

Doo Prime has provided these forward-looking statements based on all current information available to Doo Prime and Doo Prime’s current expectations, assumptions, estimates, and projections. While Doo Prime believes these expectations, assumptions, estimations, and projections are reasonable, these forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond Doo Prime’s control. Such risks and uncertainties may cause results, performance, or achievements materially different from those expressed or implied by the forward-looking statements.     

Doo Prime does not provide any representation or warranty on the reliability, accuracy, or completeness of such statements. Doo Prime is not obliged to provide or release any updates or revisions to any forward-looking statements.    

 
Disclaimer    

While every effort has been made to ensure the accuracy of the information in this document, DOO Prime does not warrant or guarantee the accuracy, completeness or reliability of this information. DOO Prime does not accept responsibility for any losses or damages arising directly or indirectly, from the use of this document. The material contained in this document is provided solely for general information and educational purposes and is not and should not be construed as, an offer to buy or sell, or as a solicitation of an offer to buy or sell, securities, futures, options, bonds or any other relevant financial instruments or investments. Nothing in this document should be taken as making any recommendations or providing any investment or other advice with respect to the purchase, sale or other disposition of financial instruments, any related products or any other products, securities or investments. Trading involves risk and you are advised to exercise caution in relation to the report. Before making any investment decision, prospective investors should seek advice from their own financial advisers, take into account their individual financial needs and circumstances and carefully consider the risks associated with such investment decision. 

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