Due to a strengthening U.S. dollar and rising U.S. bond yields, gold prices declined by 1%. Investors are awaiting more U.S. economic data later this week, which could impact the Federal Reserve’s policy stance.

Similarly, pressured by the stronger dollar and profit-taking by investors, oil prices fell, but remain not far from the recent highs reached earlier. 

Gold >>

Yesterday, weighed down by a surging U.S. dollar and rising US bond yields, the U.S. dollar index reached a new high since July 10th at 102.142.  

This led to a renewed weakness in international gold prices, causing a 1% drop. Market analysts suggest that the upcoming U.S. employment data later this week will be a crucial indicator for Federal Reserve rate expectations.  

Any unexpectedly positive signs could remind traders that the possibility of further interest rate hikes still exists, potentially exerting pressure on gold prices. 

The trajectory of gold prices from May to July is increasingly resembling an “Inverse Head and Shoulders” pattern. This is a classic bullish reversal pattern, suggesting a potential shift from a downward to an upward trend.  

If gold manages to rebound over the next five trading days and surpass the $1987 level, this will reinforce the belief in the “Inverse Head and Shoulders” pattern and could indicate a gold price rise to the $2070 level. However, if gold falls below the $1945 level, a price decline is possible. 

Since its retreat from the high of $1987, gold’s path has been quite erratic. Yesterday, aided by fundamental factors, it dropped to around $1940. If it remains above this level, the likelihood of a bullish attempt to regain lost ground is significant. 

Technical Analysis: 

Today’s short-term trading strategy for gold suggests focusing primarily on short positions during rebounds and considering long positions during pullbacks.  

• Key resistance levels in the short term are at 1958-1963. 
• Key support levels in the short term are at 1935-1930. 

WTI Crude Oil >>

In the early Asian trading session today, WTI crude oil was trading around $82.16 per barrel. While international oil prices have experienced a decline, they remain not far from the near three-and-a-half-month high reached in the previous trading day.  

This is attributed to production cuts by manufacturers, resulting in a tightened global supply, along with robust demand from the world’s largest fuel consumer, the United States. 

Oil prices have been influenced by the strengthening of the US dollar and signs of profit-taking, limiting the extent of their increase. Investors are placing bets on a tightening global supply and increased demand in the latter half of 2023.  

Market analysts suggest that a weaker US dollar and potential policies from China could provide bullish factors for oil futures, while indications of a soft landing for the US economy could also improve the outlook for oil demand. 

The oil price indicator has remained in overbought territory for a prolonged period, with energy not yet experiencing further release. In the short term, crude oil is in need of a substantial correction before further upward space can be unlocked. 

Technical Analysis: 

Short-term trading strategy suggests focusing on long positions on pullbacks and short positions on rebounds.  

• Key resistance levels to monitor on the upside at around 83.0-83.5. 
• Key support levels to monitor on the downside at around 81.0-79.5. 

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