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Weak Nonfarm Data Puts Pressure On Gold Prices, Oil Prices Reach Nine-Week High


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. 

Gold>>

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. 

Technical Analysis: 

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. 

Technical Analysis: 

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. 

Forward-looking Statements    
This article contains “forward-looking statements” and may be identified by the use of forward-looking terminology such as “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “hope”, “intend”, “may”, “might”, “plan”, “potential”, “predict”, “should”, or “will”, or other variations thereon or comparable terminology. However, the absence of such terminology does not mean that a statement is not forward-looking. In particular, statements about the expectations, beliefs, plans, objectives, assumptions, future events, or future performance of Doo Prime will be generally assumed as forward-looking statements.     

Doo Prime has provided these forward-looking statements based on all current information available to Doo Prime and Doo Prime’s current expectations, assumptions, estimates, and projections. While Doo Prime believes these expectations, assumptions, estimations, and projections are reasonable, these forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond Doo Prime’s control. Such risks and uncertainties may cause results, performance, or achievements materially different from those expressed or implied by the forward-looking statements.     

Doo Prime does not provide any representation or warranty on the reliability, accuracy, or completeness of such statements. Doo Prime is not obliged to provide or release any updates or revisions to any forward-looking statements.    

 
Disclaimer    

While every effort has been made to ensure the accuracy of the information in this document, DOO Prime does not warrant or guarantee the accuracy, completeness or reliability of this information. DOO Prime does not accept responsibility for any losses or damages arising directly or indirectly, from the use of this document. The material contained in this document is provided solely for general information and educational purposes and is not and should not be construed as, an offer to buy or sell, or as a solicitation of an offer to buy or sell, securities, futures, options, bonds or any other relevant financial instruments or investments. Nothing in this document should be taken as making any recommendations or providing any investment or other advice with respect to the purchase, sale or other disposition of financial instruments, any related products or any other products, securities or investments. Trading involves risk and you are advised to exercise caution in relation to the report. Before making any investment decision, prospective investors should seek advice from their own financial advisers, take into account their individual financial needs and circumstances and carefully consider the risks associated with such investment decision. 

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