The U.S. Dollar fell to its lowest level in over a year on Wednesday, following data indicating a slowdown in U.S. Consumer Price Inflation (CPI) in June.  

This suggests that the Federal Reserve may only need to raise interest rates once more this year. As a result, gold surged over 1%, while oil prices reached their highest level in two months. Brent crude futures prices hit a new high since May. 

Gold>>

Gold surged over 1% on Wednesday as U.S. June CPI data showed inflation rates reaching their lowest level in over two years.  

Despite hawkish comments from Federal Reserve officials Barkin and Kashkari, the U.S. Dollar index continued to decline, attracting investors’ attention to spot gold as a safe-haven asset and driving its strong rally. 

After the release of the U.S. June CPI data, spot gold quickly rose $20 to a high of $1954.79. The price rallied strongly above the key level of $1933, with minor pullbacks, and broke through the resistance level of $1940 in the Asian and European sessions.  

Stimulated by the CPI news, it formed a bullish breakout. The immediate resistance level of $1940 was easily surpassed, and it swiftly surged toward the $1950 level before retracing slightly to around $1940.  

After the breakout, a new range was established with the potential for a reversal pattern. The upper limit of the rebound in the evening is around the $1960 – $1965 range. 

Technical Analysis: 

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

• Key resistance levels to watch in the short term are around 1965-1970.  

• Key support levels to watch in the short term are around 1935-1930. 

WTI Crude Oil>>>

Oil prices benefited from the U.S. Dollar hitting a two-month low, with Brent crude futures reaching a new high since early May, surpassing $80 per barrel for the first time. The U.S. Energy Information Administration (EIA) lowered its forecast for U.S. crude oil production this year.  

Optimistic demand expectations and supply cuts by major global oil-exporting countries have contributed to the strong upward momentum in oil prices. During Wednesday’s U.S. session, WTI crude oil traded near $75.7 per barrel and remained steady. 

The EIA revised down its forecast for U.S. crude oil production in 2023 by 50,000 barrels per day. Prior to that, the Organization of the Petroleum Exporting Countries (OPEC) and its allies in the OPEC+ alliance announced an extension of the production cut agreement until the end of 2024.  

The EIA expects global demand to exceed supply by approximately 100,000 barrels per day in 2023 and by 200,000 barrels per day in 2024. The International Energy Agency (IEA) stated that the oil market will remain tight in the second half of 2023 due to strong demand from emerging economies such as China, coupled with recent supply cuts announced by major exporting countries like Saudi Arabia and Russia. 

On Wednesday, oil prices continued their bullish and volatile upward trend. During the Asian and European sessions, prices experienced a minor retracement and found support around the $74.7 level. Subsequently, there was a strong upward rally, breaking through the $75.2 level and extending the climb toward the $76 level before closing with strength. 

Technical Analysis: 

For short-term trading, it is suggested to focus on buying at pullbacks and selling at rebounds.   

• Key resistance levels to watch on the upside are around 77.0-77.6.  
• Key support levels to monitor on the downside are around 74.5-74.0. 

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