The U.S. dollar touched a three-week low on Monday as remarks from Federal Reserve officials reinforced expectations of a tightening cycle, while gold prices remained relatively stable.
Oil prices declined around 1% on Monday amid concerns about potential U.S. rate hikes, with investors awaiting U.S. inflation data for insights into the Federal Reserve’s policy stance.
On Tuesday, gold prices edged higher, trading around $1930 per ounce in early session, with market attention turning to the U.S. Consumer Price Index (CPI) data scheduled for release on Wednesday.
On Monday, gold prices remained under pressure, experiencing less than $10 fluctuations, as the previous release of U.S. employment data and Federal Reserve speeches reinforced market expectations of interest rate hikes. Investors are eagerly awaiting the U.S. inflation data, which will have an impact on the Fed’s policy stance, resulting in minimal changes in gold prices.
Overnight, spot gold remained relatively stable, briefly dropping to an intraday low of $1912.74 before quickly recovering losses. It ended the session with a marginal gain of 0.02%, closing at $1925.32 per ounce.
In terms of technical analysis, gold exhibited a mixed pattern on Monday, experiencing a slight decline in the Asian and European sessions before finding support around the $1919 level.
It then oscillated higher around $1924 in the afternoon before breaking below the $1919 level and continuing to decline towards the $1912 vicinity. However, it quickly rebounded and experienced a significant upward movement after 9:00 PM, ultimately closing near the morning’s opening level of $1924, showing a rebound from the intraday lows.
Today’s short-term trading recommendation for gold is to focus on selling on rebounds as the primary strategy, with buying on pullbacks as a secondary approach.
- Key resistance levels to monitor in the short term are between 1935 and 1940.
- Key support levels to watch in the short term are between 1910 and 1915.
WTI Crude Oil >>
In early Asian trading, WTI crude oil is trading near $73.32 per barrel. Oil prices declined by about 1% on Monday, weighed down by increasing possibilities of a U.S. interest rate hike. However, the decline was limited due to supply constraints imposed by the largest oil exporters, Saudi Arabia and Russia.
Both countries announced new production cuts last week, bringing the total OPEC+ production reduction to approximately 5 million barrels per day, accounting for about 5% of global oil demand.
Yesterday, oil prices maintained a strong and volatile trend. Prices experienced a minor pullback during the Asian and European sessions, finding support around the $73 level.
In the late U.S. session, prices quickly surged above the $74 level but eventually retreated and closed with a consolidation pattern. The daily candlestick showed a bearish correction after the upward move, but overall prices remained resilient above $72.5, maintaining a strong and oscillating momentum.
Overall, the release of nonfarm payroll data last week dampened expectations of a U.S. interest rate hike, leading to a two-week low for the U.S. dollar. Additionally, the U.S. government plans to purchase an additional 6 million barrels of crude oil to replenish its strategic petroleum reserves.
Geopolitical tensions have also escalated, adding to the positive factors supporting oil prices. Investors should monitor news related to geopolitical developments throughout the day, as oil prices have the potential to target $75 per barrel.
Short-term trading recommendation for today is to use the middle band as defense and continue to buy on pullbacks.
- Key resistance levels to watch in the upper range: 74.5-75.
- Key support levels to watch in the lower range: 71.5-71.
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