Gold Hits New Record Highs, Oil Prices Decline

2024-08-21 | Commodities , Daily Analysis , Daily Insight , Gold , Oil , Precious Metals

Gold Hits New Record Highs, Oil Prices Decline

Gold prices extended their record-breaking rally, supported by a weakening dollar, which reached a new low for the year, and increasing investor confidence in a potential Fed rate cut in September. The price of gold briefly touched an all-time high, holding strong above the critical $2,500 level.

Meanwhile, oil prices dropped by about 1%, hitting a two-week low, as Israel’s acceptance of a Gaza ceasefire agreement eased concerns over Middle East supply, and a sluggish economy in a major Asian country weighed on fuel demand.

Gold

On Tuesday, gold prices continued their record-breaking rally, driven by a weaker dollar, which reached a new low for the year, and growing investor confidence in a possible rate cut by the Fed in September.

Spot gold remained strong, hitting a historic high of $2,531.6 per ounce during the US session before paring gains and closing up 0.39% at $2,514.02 per ounce.

The dollar index fell to a seven-month low, making gold more attractive to investors holding other currencies. Meanwhile, the yield on the US 10-year Treasury note dropped to a two-week low, reducing the opportunity cost of holding gold.

Traders estimate a 32.5% chance of a 50-basis-point rate cut in September and a 67.5% chance of a 25-basis-point cut. Cumulative rate cuts by the end of 2025 are expected to total about 222 basis points.

The market is closely watching the release of the Fed’s July policy meeting minutes on Wednesday and Fed Chair Powell’s speech at the Jackson Hole Symposium later this week for more clues on potential rate cuts.

Gold Technical Analysis:

Yesterday, on the technical side, gold prices saw a choppy session. After a brief dip to test support at $2,497 during the European session, prices quickly surged, breaking above $2,528 before consolidating.

During the US session, gold fluctuated around the $2,520 level, eventually breaking above $2,531 before facing resistance and falling back to close near $2,500.

Gold Hits New Record Highs, Oil Prices Decline
(Gold Futures, 1-day chart) 

Today’s Focus:

Today’s short-term trading strategy suggests buying on dips as the primary approach, with selling on rallies as a secondary strategy.

  • Key Resistance: $2,530–$2,535
  • Key Support: $2,500–$2,495

Oil

On Tuesday, oil prices dropped by about 1%, reaching a two-week low as Israel’s acceptance of a Gaza ceasefire agreement eased concerns about Middle East supply. Additionally, weak economic data from a major Asian country continued to weigh on fuel demand.

WTI crude fell below the $73 per barrel mark, closing down 1.03% at $72.99 per barrel, while Brent crude settled down 0.94% at $76.65 per barrel.

US Secretary of State Antony Blinken visited Egypt to advance progress on a Gaza ceasefire and a hostage release agreement, although significant differences remain to be resolved in this week’s discussions.

In the US, API data showed a surprising increase of 347,000 barrels in crude inventories for the week ending August 16, against expectations of a 2.867 million barrel draw, pressuring oil prices in early Asian trading on Wednesday. Investors should continue to monitor geopolitical developments closely.

Oil Technical Analysis:

Yesterday, the technical outlook for oil showed continued pressure and weakness, with prices struggling to maintain any significant upward momentum.

European and Asian trading saw prices continuously fall from resistance at $74, and while the US session saw a brief recovery to $74.3, it was followed by another round of declines, leading to a weak close near $72.5.

Gold Hits New Record Highs, Oil Prices Decline
(Light Crude Oil Futures, 1-day chart) 

Today’s Focus:

Today’s short-term trading strategy suggests buying on dips as the primary approach, with selling on rallies as a secondary strategy.

  • Key Resistance: $74.3–$74.8
  • Key Support: $72.0–$71.5

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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