Gold Drops as Powell Turns Hawkish, Oil Slumps

2024-10-01 | Commodities , Daily Analysis , Daily Insight , Gold , Oil , Precious Metals

Gold Retreats After Record High, Oil Drops 2%

On Monday, gold prices slipped nearly 1%, pressured by a stronger US dollar and rising bond yields after Federal Reserve Chair Jerome Powell’s hawkish remarks, which dampened market expectations of a 50-basis-point rate cut in November.

The price briefly fell below $2,630 per ounce.

Meanwhile, concerns about oil supply disruptions due to escalating Middle East tensions were overshadowed by OPEC+ plans to increase production and signs of weakening global demand.

Both WTI and Brent crude posted their third consecutive monthly decline, marking the biggest quarterly drop in a year.

Gold

On Monday, gold prices declined by nearly 1%, weighed down by a stronger dollar and rising bond yields following hawkish remarks from Federal Reserve Chair Jerome Powell, which tempered expectations of a 50-basis-point rate cut in November.

Spot gold continued its decline, hitting an intraday low of $2,624.87 per ounce before closing down 0.89% at $2,634.73 per ounce, bringing its quarterly gain to over 13%.

Powell stated that after positive data showing sustained economic growth and consumer spending, the Fed is likely to stick with 25-basis-point rate cuts and isn’t in a hurry to ease further. Following his comments, markets now expect the Fed to proceed with smaller, gradual cuts through mid-next year.

The dollar index surged 0.46% to 100.93 before closing at 100.76. This week, investors will focus on key data releases, including the ISM Manufacturing Index on Tuesday, the Job Openings data, and the much-anticipated September jobs report on Friday.

Gold Technical Analysis:

In technical trading, gold faced resistance around $2,665 during the European session, followed by a downward move that broke below $2,650, continuing its slide to $2,640. In the US session, gold accelerated its decline, breaching the $2,630 mark before bottoming at $2,624 and settling slightly higher.

(Gold Futures, 1-day chart) 

Today’s Focus:

For today, the strategy suggests selling on rallies and buying on pullbacks.

  • Key resistance levels: $2,650–$2,655
  • Key support levels: $2,620–$2,615

Oil

On Monday, concerns that the Middle East conflict might reduce oil supply were overshadowed by OPEC+ plans to increase production and signs of weaker global demand.

Both WTI and Brent crude saw losses for the third straight month, marking the largest quarterly decline in a year. WTI crude settled down 0.42%, at $68.16 per barrel, while Brent crude dropped 0.21%, closing at $71.81 per barrel.

Despite intensified Israeli attacks on Lebanon over the weekend, oil prices dipped slightly at the start of the week. However, some expect prices to rally as the week progresses due to concerns about potential supply disruptions in the Middle East. Israel has ramped up military actions against Hamas and Iran-backed Hezbollah, sparking fears that critical oil supplies from Iran might be directly affected.

Oil Technical Analysis:

Technically, oil prices showed a brief rebound but faced resistance at $69.3 during the European session, leading to a further drop below the $68.0 mark, closing near $67.5 after a partial recovery.

(Light Crude Oil Futures, 1-day chart) 

Today’s Focus:

Today’s strategy suggests selling on rallies and buying on pullbacks.

  • Key resistance levels: $69.5–$70.0
  • Key support levels: $67.0–$66.5

Risk Disclosure
Securities, Futures, CFDs and other financial products involve high risks due to the fluctuation in the value and prices of the underlying financial instruments. Due to the adverse and unpredictable market movements, large losses exceeding your initial investment could incur within a short period of time.  
Please make sure you fully understand the risks of trading with the respective financial instrument before engaging in any transactions with us. You should seek independent professional advice if you do not understand the risks explained herein. 

Disclaimer
This information contained in this blog is for general reference only and is not intended as investment advice, a recommendation, an offer, or an invitation to buy or sell any financial instruments. It does not consider any specific recipient’s investment objectives or financial situation. Past performance references are not reliable indicators of future performance. Doo Prime and its affiliates make no representations or warranties about the accuracy or completeness of this information and accept no liability for any losses or damages resulting from its use or from any investments made based on it. 
The above strategies reflect only the analysts’ opinions and are for reference only. They should not be used or considered as the basis for any trading decisions or as an invitation to engage in any transaction. Doo Prime does not guarantee the accuracy or completeness of this report and assumes no responsibility for any losses resulting from the use of this report. Do not rely on this report to replace your independent judgment. The market is risky, and investments should be made with caution. 

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