Gold Nears Record High as Oil Declines

2024-10-17 | Commodities , Daily Analysis , Daily Insight , Gold , Oil , Precious Metals

Gold Nears Record High as Oil Declines

Gold

On Wednesday, expectations of global central bank rate cuts, along with geopolitical tensions, boosted demand for safe-haven assets, pushing gold prices near a record high. Gold briefly touched $2,685.41 per ounce before closing up 0.43% at $2,673.70 per ounce.

Economic data released on Wednesday further fueled expectations of global central bank rate cuts. In the US, September import prices saw their biggest decline in nine months due to falling energy costs, suggesting a favorable inflation outlook. This raised expectations that the Federal Reserve might continue cutting interest rates. Goldman Sachs anticipates the Fed will implement 25 basis point rate cuts from November 2024 through mid-2025, with terminal rates in the 3.25% to 3.5% range.

Meanwhile, data from the UK showed inflation falling more than expected in September, bolstering market bets on a Bank of England rate cut next month.

On the geopolitical front, reports indicated that Israel carried out airstrikes on an underground weapons facility in southern Beirut, a stronghold of Iran-backed Hezbollah. This attack occurred just hours after the Lebanese prime minister claimed the US had assured him that Israel’s attacks on the capital would ease.

Investors will be closely watching the US retail sales and jobless claims data today, along with ongoing geopolitical developments.

Gold Technical Analysis:

Gold pushed higher on Wednesday, rising from support around $2,660 and reaching as high as $2,685 before pulling back slightly. The price settled just below this resistance level, closing with a bullish candlestick. The short-term support for gold remains at $2,660, with the key resistance at $2,685-$2,690.

Gold Nears Record High as Oil Declines
(Gold Futures, 1-day chart) 

Today’s Focus:

  • Strategy: Sell on rebounds, buy on dips.
  • Resistance: $2,685-$2,690
  • Support: $2,665-$2,660

Oil

Oil prices remained subdued on Wednesday, pressured by forecasts of slowing global demand growth. WTI crude fell 0.49% to $70.61 per barrel, while Brent crude dipped 0.31% to $74.41 per barrel.

Weak demand outlook continues to weigh on oil prices. Both OPEC and the International Energy Agency (IEA) have downgraded their forecasts for global demand growth in 2024. The IEA’s report highlighted that oil demand is expected to decline faster than previously forecast over the coming decades, driven by the rise of electric vehicles and the use of biofuels and hydrogen in the aviation and shipping sectors.

However, oil prices found some support from the latest American Petroleum Institute (API) data and ongoing geopolitical tensions. The API reported that US crude oil inventories fell by 1.58 million barrels last week, contrary to analysts’ expectations of an increase of 1.8 million barrels.

Uncertainty surrounding the Middle East remains a concern. Israel continued airstrikes on southern Beirut early Wednesday, just hours after the Lebanese prime minister claimed the US had assured him the attacks would ease.

Key data releases today include the US EIA crude oil inventories, US retail sales, and jobless claims figures, as well as further developments on geopolitical tensions.

Oil Technical Analysis:

Oil continued its downtrend on Wednesday, facing resistance around $71.20 before slipping below $70. Prices bottomed near $69.60 before rebounding slightly, but the bearish trend remains intact.

Gold Nears Record High as Oil Declines
(Light Crude Oil Futures, 1-day chart) 

Today’s Focus:

  • Strategy: Sell on rebounds, buy on dips.
  • Resistance: $72.0-$72.5
  • Support: $69.5-$69.0

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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