After Non-Farm Data, Gold Rises Then Retreats, Crude Oil Records Weekly Decline of About 6% Last Week

Despite weaker-than-expected US employment data, gold fell to a one-month low last Friday, continuing the corrective trend that began after a sharp rise last month, as investors took profits and geopolitical risks eased slightly, causing gold to weaken slightly.

Although OPEC+ may extend production cuts, uncertainty in demand and easing tensions in the Middle East have reduced the risk of supply shortages, with crude oil falling about 6% last week, marking the largest weekly decline in three months.

Gold >>

Last Friday, despite weaker-than-expected US employment data, spot gold still fell to a one-month low due to profit-taking by investors and a slight easing of geopolitical risks. It continued the corrective trend that began after a sharp rise last month.

It briefly surged above USD 2320 during the US session, then dropped by nearly USD 50, falling below USD 2280 per ounce at one point, ultimately closing down by 0.09% at USD 2301.68 per ounce. The US added 175,000 non-farm jobs last month, lower than economists’ forecast of 243,000.

After the data release, gold prices rose to USD 2320.78 but quickly gave up gains. Although the employment data reinforced expectations of the Fed starting rate cuts this year, which should support non-interest-bearing gold, it instead prompted the market to turn to higher-risk assets.

Driven by the outbreak of tensions in the Middle East and strong central bank buying, gold hit a historic high of USD 2431.41 in April, but since then, safe-haven gold has fallen by 5.7%, or about USD 140.

Last Friday, gold prices, buoyed slightly by the positive impact of the non-farm employment data, quickly surged higher, but faced resistance at the USD 2320 level, oscillating lower and closing below it.

Intraday, it briefly accelerated downwards through the USD 2280 level to around USD 2277 before rebounding near the USD 2300 level, forming a doji candlestick on the daily chart, indicating restrained oscillation around the USD 2320 level, showing a bias towards downward pressure.

Technical Analysis:

Today’s short-term strategy for gold suggests prioritizing short positions during rebounds, with long positions considered as a secondary approach during pullbacks.

  • Key resistance levels to watch in the short term are around 2320-2325.
  • Key support levels to watch in the short term are around 2286-2280.

WTI Crude Oil >>

Last Friday, despite the possibility of OPEC+ extending production cuts, uncertainties in demand and a relaxation of tensions in the Middle East reduced the risk of supply shortages, resulting in crude oil experiencing its largest weekly decline in three months.

WTI crude oil continued its downward trend, falling by over 1% during the day and ultimately closing down by 1.32% at USD 77.76 per barrel, marking a weekly decline of 6.84%; Brent crude oil fell by 1.10%, closing at USD 82.67 per barrel, with a weekly decline of 5.95%.

The Fed’s decision last week to maintain interest rates stable while hinting that high inflation might postpone rate cuts had a significant impact on the oil market, as higher rates could restrain economic growth and reduce oil demand.

Expectations for the Fed to implement its first rate cut in September have strengthened, which could further affect future oil prices. Additionally, fluctuations in geopolitical risks have always been important factors affecting oil prices.

Recently, with Israel and Hamas considering a temporary ceasefire, the geopolitical risk premium has diminished. However, the dynamics of OPEC+ remain a focus of market attention. OPEC+’s next meeting is scheduled for June 1st, and it is expected that if oil demand does not increase, OPEC+ may extend the voluntary production cuts.

From a technical perspective, crude oil on Friday remained weak below USD 79.60, showing a downward trend with minor rebounds in the Asian and European sessions but being pressured at the USD 79.60 level and subsequently weakening. In the late US session, it further broke below the USD 78 level and closed weakly.

Technical Analysis:

Today’s crude oil trading strategy suggests prioritizing short positions during rebounds, with long positions considered as a secondary approach during pullbacks

  • Key resistance levels to monitor in the short term are around 79.6-80.0.
  • Key support levels to monitor in the short term are around 77.5-77.0.

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