The soft U.S. inflation report led to a sharp drop in U.S. Treasury yields, putting pressure on the U.S. dollar and boosting gold prices to a one-week high.
Signs indicate a potential easing of tension in the Middle East and uncertainty in U.S. oil inventories, causing oil prices to retreat from early gains, briefly reaching a one-week high before pulling back.
On Tuesday, spot gold closed at $1,966.96 per ounce, up 0.86%, while December gold futures settled 0.2% higher at $1,966.7 per ounce.
Boosted by a significant decline in the U.S. dollar and a rise in U.S. Treasury yields, spot gold saw a substantial increase. The release of U.S. inflation data sparked a strong market reaction, lifting the stock market and pushing the U.S. dollar to its lowest level in months.
Gold prices are expected to continue rising. The U.S. CPI data confirmed soft potential demand in the U.S., providing a reason for the mild strengthening of the U.S. dollar index, which is favorable for gold investment demand.
On the technical side, after the release of the CPI data in the evening, gold experienced a strong bullish rally, breaking through previous highs and continuing the upward trend.
During the Asia-Europe session, prices fluctuated and consolidated above $1,943, showing resistance to declines. In the late U.S. session, influenced by the positive impact of the CPI data, gold prices overall experienced a strong bullish rally, breaking through and holding above the $1,960 level.
Towards the end of the U.S. session, there was an accelerated push higher, breaking through the $1,970 level before facing resistance, leading to a pullback and a volatile close.
Today’s gold short-term trading strategy suggests focusing on establishing long positions during pullbacks, with short positions at higher levels as a secondary approach.
- Key resistance levels to watch in the short term are around 1975-1989.
- Key support levels to watch in the short term are around 1955-1945.
WTI Crude Oil >>
On Tuesday, WTI crude oil futures closed flat at $78.26 per barrel, while Brent crude oil futures fell by $0.05 per barrel to $82.47, dropping below the settlement price of $84.58 per barrel on October 6, the day before Hamas attacked Israel.
Despite expectations of a slowdown in economic growth in almost all major economies, the International Energy Agency (IEA) raised its forecasts for oil demand growth for this year and the next.
OPEC also increased its predictions for global oil demand growth in 2023 and maintained relatively high forecasts for 2024. According to the U.S. Energy Information Administration (EIA), API crude production in the United States increased by 152,000 barrels per day until November 10th.
The monthly report indicates a potential supply shortage in the oil market by the end of the year, with the possibility of oversupply in early 2024.
On the technical side, oil prices experienced an initial rise followed by a decline. During the Asia-Europe session, prices quickly dipped and stabilized around the $77.7 level, prompting a rapid bullish rally breaking above.
In the late U.S. session, there was a second acceleration in pushing higher, breaking through the $79.7 level before facing resistance and pulling back to close with volatility around the $78 level.
Today’s crude oil trading strategy suggests a focus on establishing long positions on pullbacks as the primary approach, with short positions at higher levels as a secondary consideration.
- Key resistance levels to monitor in the short term are around 79.7-80.2.
- Key support levels to monitor in the short term are around 77.0-76.5.
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