Weighed down by a stronger US dollar and rising US Treasury yields, gold prices suffered a setback to a three-week low. Meanwhile, investors remained cautious ahead of the release of July’s US non-farm payroll data.  

With Saudi Arabia and Russia possibly maintaining supply constraints until September or even longer, oil prices saw an increase of around 2.5%. 

Gold >>

Yesterday, international gold prices fell to a more than three-week low of $1932.32 per ounce due to robust overnight US private employment data, which heightened expectations of further tightening in US Federal Reserve monetary policy and boosted the US dollar and Treasury yields.  

Investors need to exercise caution before the release of July’s US non-farm payroll data. Market analysts suggest potential short-term volatility, particularly with expectations of continued bond yield increases. The phase of easy gold price gains has come to an end as the strengthening US dollar weighs on gold. 

The latest report from the World Gold Council (WGC) indicates a 2.0% decline in annual demand, with an expected 10% drop in gold demand from major customer India, posing a challenge for gold bulls. If interest rate futures react in a normal manner—falling on unexpectedly negative data and rising on unexpectedly positive data—the resulting decline in forward curve yields could drive a gold rebound. 

Spot gold is trading sideways at a low level, currently priced at $1934 per ounce. The levels to watch are high resistance at $1992 and low support at $1915. Gold continued its downward trend yesterday, breaking lower after rebounding around the $1955 level. 

Technical Analysis: 

Today’s short-term strategy for gold suggests a focus on selling at higher levels with short positions as the primary approach, complemented by buying during minor pullbacks. 

• The key resistance to monitors in the upper range is around 1945-1950 level. 
• The key support to watch in the lower range is around 1925-1920 level. 

WTI Crude Oil>>

In early Asian trading today, US crude oil was trading near $81.74 per barrel. Oil prices rose yesterday due to measures taken by Saudi Arabia and Russia to maintain supply constraints possibly until September or even longer.  

OPEC+ ministers are set to meet on Friday to assess the oil market situation, and coupled with non-farm payroll data, oil prices might experience another upward movement. 

Data released by the US Energy Information Administration (EIA) revealed a record reduction of 17.049 million barrels in US crude oil inventories last week, surpassing expectations as refineries ramped up production and exports exceeded 5 million barrels per day.  

With major producers continuing significant production cuts and global demand outpacing supply, analysts believe that although oil prices have steadily risen over the past month, a pullback is due and prices might decline, despite ongoing short-term tightness in the oil market. 

After Saudi Arabia’s announcement of extended production cuts, crude oil reversed its decline and surged strongly in the pre-US session, once again rising above $81 per barrel. The price eventually closed up 2.5% at $81.68 per barrel. 

Technical Analysis: 

Today’s short-term trading strategy suggests giving preference to buying on minor pullbacks as the primary approach, while considering short positions on rebounds.  

• The key resistance to monitors in the upper range is around 82.7-83.2 
• The key support to watch in the lower range is around 79.8-80.3. 

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