On Tuesday, weak New York State manufacturing activity data caused US 10-year Treasury yields to fall, recording the largest single-day drop in over two months. Gold hit its highest in over a week, reaching $2,668.80 per ounce and closing about 0.5% higher.
Meanwhile, reports that Israel would refrain from attacking Iran’s nuclear and oil facilities, combined with lowered oil demand forecasts from major organizations, extended oil’s decline.
Gold
Weakened New York State manufacturing activity data pushed 10-year US Treasury yields lower, marking the largest daily decline in over two months. Gold surged during the session, peaking at $2,668.80 per ounce. By the close, gold was up 0.5%, settling at $2,662.55 per ounce.
On Tuesday, the New York Federal Reserve reported that the October manufacturing index fell from 11.5 in September to -11.9, significantly below economists’ median forecast of 3.85, according to a Reuters poll. A positive reading indicates expansion in manufacturing activity.
The weak economic data dragged down US Treasury yields, with the 10-year Treasury yield dropping 3.9 basis points to 4.034%. The yield had been climbing for four consecutive weeks, peaking at 4.12%, its highest level since July 31. However, the US dollar remains near its two-month high, keeping some pressure on gold bulls.
IG Market Strategist Yeap Jun Rong noted that the upcoming US elections might increase demand for gold as a hedge against uncertainty. Additionally, expectations of Federal Reserve rate cuts could propel gold further, with a potential target of $2,800 per ounce by year’s end.
For today, investors should watch for the US September import price index and developments related to geopolitical tensions.
Gold Technical Analysis:
On Tuesday, gold initially faced resistance at the $2,653 level, retracing to around $2,638 during the afternoon session. The price then rebounded slightly but failed to break above the $2,657 level, returning to the $2,650 range. The overall movement aligns with expectations, with the price oscillating near the moving averages.
Today’s Focus:
- Strategy: Focus on short positions during rebounds, with opportunities to buy on dips.
- Resistance: $2,672-$2,677
- Support: $2,650-$2,645
Oil
On Tuesday, oil prices extended their decline following reports that Israel would not target Iran’s nuclear or oil infrastructure, and with both major organizations lowering their oil demand forecasts. By the close, WTI crude was down 1.36%, settling at $70.96 per barrel, while Brent crude slipped 0.57%, closing at $74.64 per barrel.
A Washington Post report revealed that Israeli Prime Minister Benjamin Netanyahu had informed the US that Israel aims to target Iranian military sites rather than nuclear or oil facilities.
So far this week, both WTI and Brent crude have nearly erased the gains made from fears that Israel might retaliate against Iran’s oil facilities. “The war premium built up last week is now unwinding,” said Price Futures Group Senior Analyst Phil Flynn, “We’re seeing a risk concern rather than a supply issue.”
Downward revisions of oil demand forecasts by both OPEC and the International Energy Agency (IEA) also contributed to the pressure on oil prices. Additionally, weak stock markets across the US and Europe added further weight on oil prices.
For today, investors should keep an eye on the upcoming US API crude inventory data, which was delayed to Thursday due to the Columbus Day holiday. The API report is expected to provide further insight into potential supply changes. Investors should also monitor ongoing geopolitical developments.
Oil Technical Analysis:
On Tuesday, oil opened lower at $74.98 per barrel before rising slightly to $75.02, then dipping back to $73.5. The price later spiked to $74.9 during the US trading session but faced renewed pressure, falling to $71.94 and closing at $72.15. The day ended with a long-tailed bearish candle, indicating further downside pressure on oil.
Today’s Focus:
- Strategy: Focus on short positions during rebounds, with opportunities to buy on dips.
- Resistance: $72.0-$72.5
- Support: $69.7-$69.2
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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.
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