Yesterday, gold prices declined by over 1% to a two-week low, pressured by a stronger U.S. dollar and rising bond yields following better-than-expected U.S. economic data.
On the other hand, oil prices closed higher due to supply tightness after OPEC+ production cuts, along with positive factors from increased demand in China and the outlook for global economic growth.
Strong U.S. economic data and the European Central Bank’s interest rate decision caused a major reversal in the U.S. dollar’s trend yesterday, leading to a significant pullback in gold prices.
Gold initially rose but faced resistance around $1982 per ounce, and despite two attempts to break through that level, it encountered accelerating selling pressure and dropped to a low of $1945 per ounce.
Market analysts suggest that with the Federal Reserve mentioning further rate hikes this year, gold prices may experience volatility and struggle to make substantial gains, depending on upcoming data releases.
The European Central Bank raised interest rates as expected by 25 basis points. However, concerns about a slowdown in the Eurozone economy may persuade the central bank to pause rate hikes going forward.
Investors will look to ECB President Lagarde for clues on further monetary policy decisions, and the ECB’s hawkish stance could act as resistance for gold prices.
With negative data from the U.S. market last night and the Federal Reserve’s interest rate hike coming into effect, gold ultimately completed its final bullish wave.
Subsequently, continuous selling pressure from institutional investors and unsuccessful attempts to breach higher levels caused gold to start declining. The lowest point reached was $1942.02 per ounce, while earlier in the week, gold prices had hit a one-week high of $1982.20 per ounce.
Spot gold closed on Thursday at $1945.86 per ounce, experiencing a significant drop of $26.05 or 1.32%.
Today’s short-term trading strategy for gold suggests focusing on selling at high rebound points and buying on minor dips.
- Key resistance levels to watch in the short term are around $1958 to $1963.
- Key support levels to monitor in the short term are around $1930 to $1935.
WTI Crude Oil >>
In the early Asian market today, US crude oil is trading near $79.61 per barrel. Yesterday, oil prices closed higher, rising nearly 1% and recovering from the previous day’s decline.
US oil briefly surpassed $80 per barrel for the first time since April 20, supported by supply tightness after OPEC+ production cuts and positive factors related to demand and global economic growth prospects.
Russia’s crude oil trading price exceeded the $60 per barrel upper limit, putting the US government in a policy dilemma.
Saudi Arabia reduced its production from 10 million barrels per day to 9 million barrels per day in July, marking the largest production cut in years. It also stated that it would extend the production cuts into August.
The market’s attention is now on the upcoming monthly meeting of the OPEC+ Joint Ministerial Monitoring Committee, focusing on whether Saudi Arabia will extend its voluntary 1 million barrels per day production cut decision into September. If the production cuts continue, it will provide strong support for oil prices.
For short-term trading, it is recommended to focus on buying on dips as the main strategy and considering selling on high rebounds as a secondary approach.
- Short-term resistance levels to watch are between 80.5 and 81.
- Short-term support levels to watch are between 78 and 78.5.
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