Gold:
On Wednesday, gold prices initially surged above the $2430 level due to expectations of two rate cuts by the Federal Reserve this year, leading to a weaker dollar. However, the US July Composite PMI rose to its highest since April 2022, and the 10-year US Treasury yield rebounded to a nearly two-week high, causing gold to reverse its gains.
Spot gold closed down 0.46% at $2397.40 per ounce after traders took profits.
The Fed is set to hold its next policy meeting at the end of July, with the market seeing a minimal chance of a rate cut then but fully pricing in a rate cut in September. The market believes there’s a 100% probability of a rate cut in September.
The US Services PMI rose to 56.0 from 55.3 in June, a 28-month high, against expectations of a drop to 55.0. The 10-year US Treasury yield rose by 3.9 basis points to 4.278% on Wednesday.
Investors are now waiting for the June Personal Consumption Expenditures (PCE) Price Index data on Friday for further insights into inflation and the Fed’s rate path.
Gold Technical Analysis:
Yesterday, gold saw initial gains in the Asian and European sessions, supported at the $2409 level, before surging past $2431 in the US session. However, it quickly reversed, breaking below the $2420 and $2410 levels, and ultimately fell below the $2400 mark to close weakly around $2392.
Today’s Focus:
- Short-term strategy: Favor shorting on rebounds and buying on pullbacks.
- Resistance: $2412-$2417
- Support: $2388-$2383
Oil
On Wednesday, oil prices edged up slightly, supported by a significant drop in US crude and fuel inventories. However, concerns over weak global demand kept oil prices near a six-week low.
WTI crude closed up 0.06% at $77.47 per barrel, while Brent crude ended down 0.09% at $81.46 per barrel.
The American Petroleum Institute (API) reported a 3.9 million barrel decrease in US crude inventories for the week ending July 19, marking the fourth consecutive weekly decline, a streak not seen since September 2023.
This suggests stable demand in the world’s largest oil consumer. Gasoline and distillate stocks also fell by 2.8 million barrels and 1.5 million barrels, respectively, indicating strong consumption of various petroleum products.
The market is closely watching the official EIA report, global economic indicators, and geopolitical events that could affect supply and demand balance. As the market is at a critical juncture, upcoming data and news events could provide clearer direction for oil prices.
Oil Technical Analysis:
Yesterday, oil prices saw a rebound, testing resistance at the $78 level before retreating and closing lower. The daily candle formed a doji, indicating indecision, with prices pressured by the 10-day and 5-day moving averages, continuing a bearish trend.
Today’s Focus:
- Short-term strategy: Favor shorting on rebounds and buying on pullbacks.
- Resistance: $78.7-$79.2
- Support: $76.4-$75.9
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