On June 13th, local time, the U.S. Department of Labor released the Consumer Price Index (CPI) data for May. The CPI dropped from an unexpectedly high 4.9% in April to 4%, marking a significant decline from the peak of 9.1% in June last year. This is also the 11th consecutive decline in CPI, reaching a new low since March 2021.
Additionally, the U.S. core CPI in May grew by 5.3% year-on-year, lower than the 5.5% in April but in line with market expectations.
The market continues to monitor the guidance on interest rate hikes from Powell’s speech during the June FOMC meeting.
The widening divergence between U.S. inflation and core inflation further supports the logic of the Federal Reserve’s decision to pause rate hikes and adopt a wait-and-see approach in June.
The U.S. dollar index declined by 0.3%, leading to an increase in the probability of a July rate hike by the Federal Reserve to 60.1%.
The yield on the U.S. 10-year Treasury bond surged by 14 basis points, resulting in a 14 basis point increase in real interest rates. This drove a significant adjustment in precious metal prices, with COMEX gold falling by 0.76%.
Gold prices experienced significant volatility following the release of CPI data, with an intraday swing of $30. The price came close to breaching the $1940 support level but settled at $1943.6 per ounce.
The daily chart indicates a downward close, and today’s opening appears slightly weak. However, the strength of the U.S. dollar remains uncertain, causing mixed trading volumes for gold breaking below.
The market has recently witnessed frequent shifts between bullish and bearish sentiments, with rebounds from low levels and downward pressure at high levels.
Currently, the market is in a phase of finding support at lower levels, with a focus on potential rebounds before assessing the possibility of a second decline.
- Consider going long around the 1942-1943 level, with support at 1935, and an upside target of 1953-1955.
- For short positions, assess the rebound situation before entering the market.
WTI Crude Oil>>
Oil prices surged over 3% on Tuesday, rebounding from the sharp decline in the previous trading session.
The rally was supported by the first short-term interest rate cut in nearly 10 months by a major Asian country.
The six-month Brent crude oil backwardation, which indicates that shorter-term futures prices are higher than longer-term futures prices, fell to its lowest level since March at around $1.10, signaling waning confidence in demand surpassing supply this year.
Concerns over demand have erased the temporary boost in oil prices from Saudi Arabia’s commitment to further production cuts starting in July, announced earlier this month.
The Organization of the Petroleum Exporting Countries (OPEC) maintained its forecast for global oil demand growth in 2023 unchanged for the fourth consecutive month, while slightly raising expectations for demand growth in China.
Crude oil experienced a volatile rally yesterday, reaching a resistance level at $69.8 per barrel before hovering around $69.0. The daily chart shows a large bullish candlestick, indicating wide-ranging fluctuations.
The future direction of oil prices may continue to be characterized by significant volatility, with the next resistance seen near the 20-day moving average at $70.4. A successful breakthrough of this level would provide further short-term bullish signals.
Crude oil hits bottom and rebounds, with a focus on testing support levels. Consider positioning for long trades on pullbacks as the primary strategy, with short trades as a secondary approach.
- Key resistance levels to monitor are between $70.0 and $70.5 per barrel.
- Key support levels to watch are between $67.5 and $66.8 per barrel.
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