The U.S. dollar strengthens, and gold continues its downtrend. Many signs indicate future supply shortages, boosting oil prices.  

This week, the focus is on the Federal Reserve rate decision and Powell’s remarks, with expectations of a final 25 basis point hike by the Federal Reserve and Powell hinting at future rate trends. 

Gold >>

The U.S. dollar index rose by 0.2%, reaching its highest level in over a week, following positive U.S. initial jobless claims data.  

The market widely anticipates a 25 basis point rate hike by the Federal Reserve on July 26^th, with hopes that it will be the last hike. This optimism drove gold to its highest level in about two months on Thursday.  

However, on Friday, gold continued its downtrend, moving further away from the two-month high set on the previous trading day, as the strong U.S. dollar made gold more expensive for holders of other currencies, and the market remained cautious ahead of next week’s Federal Reserve meeting. 

During the European session, gold fell to the $1961 level, and although it saw some rebound afterward, it faced short-term pressure around the $1968 level. It once again fell below the 10-day moving average, dropping to around $1955. Based on Friday’s gold price performance, market bulls showed significant hesitation.  

The weakening of bullish confidence can be attributed to two factors: firstly, the unexpected strong rebound in the U.S. dollar index in the past two days, which dampened gold’s upward momentum due to market expectations of continued rate hikes by the Federal Reserve.  

Secondly, gold itself faced resistance on the weekly chart and showed divergent signals, not supporting the bullish sentiment seen earlier in the week. The retracement can be considered a rejection of the large bullish candlestick, which refers to the significant increase in the price of gold on Tuesday. This rejection indicates that short-term market conditions may return to the previous weak oscillation state. 

 
Technical Analysis: 

Today’s short-term trading strategy for gold suggests a focus on selling during rebounds, with buying on pullbacks as a secondary approach.  

• Key resistance levels to watch on the upside are around 1973-1978. 
• Key support levels to watch on the downside are around 1950-1945. 

WTI Crude Oil >>

Last Friday, oil prices surged by over $1 per barrel as mounting evidence suggests that supply shortages could occur in the coming months. Additionally, the escalating tensions between Russia and Ukraine could further impact the supply. 

Russia’s continuous attacks on Ukraine’s grain export facilities for the fourth consecutive day and the seizure of vessels in the Black Sea during military exercises have intensified regional tensions since Moscow’s withdrawal from the UN-brokered maritime security corridor agreement this week.  

Furthermore, UAE Energy Minister Mazrouei stated on Friday that OPEC+ has already taken sufficient actions to support the oil market, and further measures would only require a phone call. 

From a technical perspective, oil prices continued their strong bullish momentum last Friday, surging above the closing high.  

During the Asian-European trading session, prices slightly rose, relying on the $75.6 level, and accelerated further during the U.S. session, breaking through the $77 mark to reach around $77.2 before a robust closing. The daily candle closed with a bullish breakthrough, maintaining the overall bullish rebound momentum. 

Technical Analysis: 

Today’s short-term trading strategy suggests focusing on buying on pullbacks and considering selling on high rebounds.  

• Key resistance levels to watch in the short term are around 78.0-78.5. 
• Key support levels to watch in the short term are around 75.8-75.3. 

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