On Tuesday, the U.S. Dollar Index fell to a two-month low as Federal Reserve officials signaled the end of the tightening cycle. Meanwhile, the British Pound reached a 15-month high following better-than-expected wage growth.
This led to an increase in gold prices, while the U.S. Dollar and Treasury yields declined in anticipation of U.S. inflation data that could offer insights into the Federal Reserve’s interest rate path.
On the other hand, oil prices surged approximately 2% due to the weaker U.S. dollar, hopes of increased demand from emerging markets, and supply cuts by major oil-exporting nations.
Benefiting from the weakened U.S. Dollar, international gold prices rose to $1938.20 per ounce yesterday, reaching a new high since June 21st.
Market analysts suggest that gold prices are supported by the weakness in the U.S. Dollar as the Federal Reserve hinted at nearing the end of the tightening cycle.
The market is eagerly awaiting U.S. inflation data to provide further clues on the Federal Reserve’s interest rate path. Spot gold has seen continuous gains for the third consecutive trading day, with intraday highs touching $1938.5.
The closing gains narrowed, but the price stabilized above the $1930 level, indicating a positive short-term upward trend for gold.
Gold has rebounded after reaching $1980, finding support around the $1930 level after multiple adjustments. From a technical perspective, a head-and-shoulders bottom pattern is forming around the $1910 level, suggesting a high probability of further upward movement in the short term.
The initial resistance is seen around the daily upper band at $1950, while the key support level is at the $1930 mark. Upside targets are set at $1950, while a downside break could lead to a target of $1910.
Today’s short-term trading strategy for gold suggests a focus on short positions during rebounds, with long positions considered on pullbacks.
- Key resistance levels to watch in the short term are around 1945-1950.
- Key support levels to watch in the short term are around 1920-1925.
WTI Crude Oil >>
In early Asian trading today, WTI crude oil was trading near $74.80 per barrel. Yesterday, international oil prices rebounded strongly, surging over 2% and reaching a 10-week high.
This was driven by factors such as the weakened U.S. Dollar, hopes for increased demand from developing countries, and further supply cuts by major oil exporters Saudi Arabia and Russia in August.
Additionally, the EIA’s short-term energy outlook report revised down its forecast for U.S. crude oil production this year, while predicting an increase in demand. Market analysts anticipate that these factors could push oil prices towards $80 per barrel.
Yesterday, international oil prices made slight gains, recovering from the previous session’s declines attributed to the weak U.S. Dollar. Crude oil experienced some consolidation after testing higher levels but faced resistance near the previous high of 74.0.
The daily chart shows a small bearish candlestick, indicating a retreat and a consolidation phase within the range. Despite the appearance of strength, there is currently insufficient momentum for a breakthrough.
For today’s short-term trading strategy, it is recommended to focus primarily on buying on dips and using rallies for short selling.
- Key resistance levels to monitor in the short term are around 75.8-76.3.
- Key support levels to watch in the short term are around 73.5-73.
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