The US Labor Department’s downward revision of employment data, combined with the Federal Reserve’s meeting minutes revealing a strong inclination toward a rate cut in September, led to continued declines in the dollar and Treasury yields, providing support for gold prices.
Gold initially dipped below the $2,500 mark but quickly rebounded. Meanwhile, concerns over demand grew as the US government significantly revised down a key set of employment statistics, causing oil prices to drop by $1 per barrel, marking the fourth consecutive day of losses and reaching a six-month low.
Gold
On Wednesday, the US Labor Department’s downward revision of employment data and the Federal Reserve’s meeting minutes showing a strong inclination toward a rate cut in September kept pressure on the dollar and Treasury yields, providing support for gold.
Gold prices initially dropped below the $2,500 level but quickly rebounded. Spot gold showed a volatile session, hitting a low of $2,493.78 before reversing gains following the release of the Fed’s minutes, eventually closing down 0.06% at $2,512.41 per ounce.
The minutes from the Fed’s July meeting revealed that “a substantial majority” of policymakers believed that if the data continued to align with expectations, easing policy at the next meeting might be appropriate.
After the release, the dollar extended its losses, hitting a seven-month low of 100.91 before closing at 101.18, which offered some support to gold prices. US Treasury yields also declined, further supporting gold.
The downward revision of employment data and the Fed’s July minutes bolstered expectations that the Fed will likely cut rates in September, marking the first rate cut in over four years.
Investors should also keep an eye on the US initial jobless claims data and the preliminary August manufacturing PMI figures from the US and Europe set to be released today.
Gold Technical Analysis:
Technically, gold faced pressure at the $2,519 level, leading to a downward adjustment. After a minor recovery, it fell further, breaking the $2,500 barrier to touch $2,493 before rebounding. During the night session, gold surged back above $2,519 before settling lower.
Today’s Focus:
Today’s short-term gold strategy suggests buying on dips with a primary focus on selling on rallies.
- Resistance: $2,519-$2,524
- Support: $2,493-$2,488
Oil
On Wednesday, the US government significantly revised down a key set of employment statistics, intensifying demand concerns and leading to a $1 per barrel drop in oil prices. This marked the fourth consecutive day of losses, bringing oil prices to their lowest level in over six months.
WTI crude oil fell below the $72 level, closing down 1.62% at $71.8 per barrel, while Brent crude settled 1.33% lower at $75.63 per barrel.
The Labor Department revised its estimate of total employment for the period from April 2023 to March 2024, lowering it by 818,000 jobs, highlighting the Fed’s concerns about the labor market. This revised data offset the supportive impact of declining US oil inventories and the Fed’s indication that a September rate cut is likely.
According to US government data, year-to-date crude oil exports from US ports have averaged around 4.2 million barrels per day, up 3.5% from the same period last year but representing the smallest percentage increase since 2015, when the 40-year ban on US crude oil exports was lifted.
Oil Technical Analysis:
Technically, oil faced resistance at $74.1, leading to a bearish reversal. The price continued to decline, breaking through the $73 and $72 levels, and eventually settled weakly around $71.4.
Today’s Focus:
Today’s short-term oil strategy suggests selling on rallies with a primary focus on buying on dips.
- Resistance: $73.0-$73.5
- Support: $71.0-$70.5
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