Investor sentiment was influenced by hawkish views from Federal Reserve officials on interest rates, among other factors. The rise in U.S. Treasury yields and a strong U.S. dollar led to gold hitting a five-month low.
The U.S. dollar closed slightly lower yesterday, supported by the fundamental backdrop of OPEC+ production cuts, leading to a rebound in oil prices after three consecutive trading days of decline.
Gold extended its weak and choppy decline yesterday, impacted by rising global bond yields and a stronger overall U.S. dollar. For the ninth consecutive trading day, gold closed lower, reaching a five-month low and marking the longest single-day decline since 2017.
Early Thursday, the Federal Reserve released minutes from its July meeting, revealing differences among officials regarding future rate hikes. The uncertainty about whether monetary policy will tighten still relies on data performance, creating ongoing ambiguity.
Though the meeting minutes contained both dovish and hawkish elements, the prevailing market sentiment leaned towards hawkish, leading U.S. Treasury yields and the dollar to continue their ascent and pressuring gold further.
From a technical perspective, gold experienced an initial rise followed by a drop yesterday. In the Asia-Europe sessions, the price slightly recovered around the $1890 level, but further rebounded in the afternoon, breaching the $1900 level.
The price then entered a sideways trend. During the U.S. session, it accelerated towards $1903 but faced resistance, eventually sliding back below $1900 and falling further to around $1885 by early morning, closing weakly.
Today, it’s advisable to prioritize shorting on high rebounds, with mild long positions on dips.
- Key resistance levels to watch in the short term are around 1905-1910.
- Key support levels to watch in the short term are around 1880-1875.
WTI Crude Oil >>
In the early Asian market today, WTI crude oil was trading around $80 per barrel. Due to a slight decrease in the U.S. dollar and after three consecutive days of decline, oil prices rebounded yesterday.
The U.S. Chamber of Commerce indicated that the U.S. economy might experience mild recession by the end of this year and the beginning of next year.
Recently, the strength and volatility in the U.S. Dollar Index, along with disappointing economic performance from major economies, triggered profit-taking and led to a decline in oil prices.
However, the U.S. Dollar Index slightly retreated from its two-month high yesterday, and the long-term fundamental support from OPEC+ member countries’ production cuts continued to provide positive support for oil prices.
From a technical standpoint, oil prices found stability around the $79 level, marking a rebound and recovery. In the Asia-Europe sessions, the price saw consecutive gains, reaching near $80, and then entered a sideways trend.
During the U.S. session, a slow increase pushed the price towards $80.5, maintaining strength. Ultimately, in the early morning, the price accelerated, breaking through the $81 level, before retreating slightly and closing in a volatile manner.
Today’s short-term trading strategy suggests a focus on short positions during high rebounds, with occasional long positions on dips.
- Key resistance levels to monitor in the short term are around 81-81.5.
- Key support levels to monitor in the short term are around 79-78.5.
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