Last Friday’s release of weak nonfarm data dampened expectations of a Federal Reserve rate hike. This week, attention is focused on key U.S. inflation data, including CPI and PPI, as well as statements from Federal Reserve officials, in search of clues for further interest rate paths.
Oil prices surged by about 3% last Friday, supported by supply concerns and technical buying, reaching a nine-week high.
In the early Asian trading session today, spot gold experienced a slight decline and is currently trading around $1,930 per ounce. Gold investors on this trading day are focused on speeches from Federal Reserve officials, with expectations that their comments will continue to suppress the price of gold.
Following the release of nonfarm payroll data last Friday, the yield on the benchmark 10-year U.S. Treasury note retreated from its four-month high, and the U.S. dollar dropped 0.9% to a two-week low, making gold more attractive to holders of other currencies.
Market analysts believe that the Federal Reserve will raise interest rates this month, but they are skeptical about the possibility of further rate hikes. Gold is sensitive to rising U.S. interest rates, which increases the opportunity cost of holding non-yielding gold.
Last Friday, gold experienced a bottoming and rebounding rally influenced by the nonfarm payroll data. It ultimately closed strongly. During the Asian-European sessions, prices rebounded and fluctuated around the 1910 level, and in the afternoon, they further pushed higher, breaking through the 1918 level and entering a sideways consolidation.
In the evening, supported by positive nonfarm payroll data, the price quickly surged above the 1928 level, followed by a consolidation and stabilization. It then made a strong rebound, breaking through the 1914 level and closing higher.
The daily candlestick chart shows a bottoming and rebounding pattern, with overall support and stabilization above the 1910 level. However, the overall Friday rise was mainly driven by the influence of nonfarm payroll data, and the overall market remains in a wide-ranging volatile phase between bulls and bears.
Short-term trading recommendations for gold today suggest focusing on buying during pullbacks as the primary strategy while considering short selling during rebounds as a secondary approach.
- Key resistance levels to monitor on the upside are in the range of 1935-1940.
- Key support levels to watch on the downside are in the range of 1910-1915.
WTI Crude Oil >>
In early Asian trading, WTI crude oil is trading near $73.43 per barrel. Last week, oil prices climbed approximately 3%, reaching a nine-week high, as concerns over supply and technical buying outweighed worries about the potential economic slowdown and reduced oil demand due to further interest rate hikes.
Supported by expectations of OPEC production cuts, U.S. crude oil remained relatively strong last week, stabilizing above the daily moving averages. After the release of nonfarm payroll data on Friday, U.S. crude oil experienced a strong rally, testing resistance around $73.8, and closed with a large bullish candle on the daily chart.
Market analysts note that the number of active energy and oil rigs in the U.S. has increased this week, marking the first such increase in ten weeks, while the number of natural gas rigs recorded the largest weekly gain since October 2016. The decline in the U.S. dollar to a two-week low has also provided support to oil prices.
After multiple tests near the $67.0 level, crude oil bulls have resumed their upward momentum, forming an ascending wedge pattern in the range of $70.0 to $70.9. The weekly chart closed with a doji candlestick, showing price stabilization and a gradual recovery after testing the lower range near $67.0, closing within the neutral range.
Short-term trading recommendation for today: Focus on buying at dips and consider selling at rebounds.
- Resistance levels to watch in the short term: $74.5 to $75.
- Support levels to watch in the short term: $71.5 to $72.
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