After the downward revision of GDP growth in the third quarter in the United States, the yield on the benchmark 10-year U.S. Treasury bonds fell to its lowest level since July, and the U.S. dollar index hit a new low in almost five months, pushing gold prices to a three-week high.
Angola’s withdrawal from OPEC dragged oil prices down by more than 2% at one point, but as expectations of a Fed interest rate cut in March heated up, the U.S. dollar index continued to weaken, helping oil prices recover from their decline.
On Thursday, following the downward revision of GDP growth in the United States for the third quarter, gold prices were driven higher. Spot gold closed up 0.71% on Thursday, ending at USD 2045.83 per ounce. February gold futures settlement price rose by 0.18%, closing at USD 2051.3 per ounce.
In the face of high inflation in the United States, there remains uncertainty about the timing of the Federal Reserve’s interest rate hike. The resilience of the U.S. economy may provide the Federal Reserve with greater leeway to maintain higher interest rates for a longer period.
Nevertheless, given that higher interest rates raise the opportunity cost of investing in gold, gold is still expected to benefit from a lower interest rate environment.
However, the rising risk appetite could suppress the rise in gold, especially if there are more signs of a soft landing in the U.S. economy, which is expected to weaken the safe-haven demand for gold.
On the technical side, after repeated fluctuations around the USD 2033 level, gold eventually experienced a bottoming and rebound, breaking through the closing high.
During the late U.S. session, there was a second retracement and a break below the USD 2032 level, followed by another bottoming and rebound, pushing the price higher. In the early morning, the gold price slowly climbed to around USD 2045, closing strongly.
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 2060-2066.
- Key support levels to watch in the short term are around 2020-20205.
WTI Crude Oil >>
On Thursday, as Angola withdrew from OPEC and tensions escalated in the Middle East, the slowing U.S. economic growth and increased crude oil production initially dragged oil prices down by more than 2%.
However, the continuous weakening of the U.S. dollar index due to expectations of a Federal Reserve interest rate cut in March helped oil prices recover from their decline.
West Texas Intermediate (WTI) crude oil closed down USD 0.33 per barrel, ending at USD 73.89 per barrel, while Brent crude oil futures closed down USD 0.31 per barrel, at USD 79.39 per barrel.
Angola’s announcement of its withdrawal from the Organization of the Petroleum Exporting Countries (OPEC) raised questions about OPEC’s efforts to support prices by limiting global supply.
In recent months, the oil-producing group led by Saudi Arabia has been seeking support to deepen production cuts and boost oil prices. Angola’s daily production is around 1.1 million barrels, while the entire OPEC group produces 28 million barrels per day.
Although Angola is a relatively small oil-producing country, its withdrawal may have limited impact on global supply. On the technical side, oil prices experienced a mixed trend, with a slight rebound in the Asian and European sessions facing resistance near the USD 74.5 level, leading to a retreat.
During the late U.S. session, the weak downward trend continued, breaking below the USD 73 level and reaching around USD 72.5 before experiencing a bottoming and rebound. In the early morning, oil prices bottomed out and rose, oscillating and recovering to above USD 74, closing with a volatile doji candlestick.
The overall price remained in a rapid back-and-forth between USD 72.5 and USD 74.5, maintaining a fluctuating rhythm between bullish and bearish, with the closing returning to the USD 74 level, continuing the oscillating pattern between bulls and bears.
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 75.0-76.0.
- Key support levels to monitor in the short term are around 72.0-71.0.
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