Diminished Rate Cut Hopes Lead to Gold Price Decline, Oil Prices Plunge 3% to Hit Over Two-Week Low

The pressure caused by the diminished hope of a Fed rate cut outweighed the safe-haven demand triggered by geopolitical tensions in the Middle East, leading to a 0.9% drop in gold prices.

Under the multiple influences of rising US commercial crude inventories, a stronger dollar, and eased geopolitical risks, oil prices fell by 3%, hitting a new two-week low.

Gold >>

On Wednesday, the pressure caused by the diminished hope of a Fed rate cut overshadowed the safe-haven demand triggered by geopolitical tensions in the Middle East, causing gold prices to fall by 0.9%.

Spot gold fluctuated lower, plunging more than USD 10 in the late session to hit a daily low of USD 2354.38, ultimately closing down by 0.9% at USD 2361.1 per ounce.

Federal Reserve officials, including Chairman Powell, avoided providing any guidance on when a rate cut might occur, instead suggesting that monetary policy needs to remain restrictive for a longer period. With the market estimating a 71% likelihood of a rate cut in September, gold prices remained under pressure.

Yesterday, gold prices oscillated around the USD 2373 level on a technical basis, undergoing repeated fluctuations before experiencing a significant downward adjustment during the late American session.

After 11:00 PM, gold prices quickly dropped under pressure from the USD 2395 level, continuing to decline in the early morning, breaking through the USD 2370 level and settling around USD 2360, indicating a consolidation in a bearish trend.

Overall, prices have been suppressed below the USD 2400 level since last Friday’s high of USD 2430, staying below this level for two consecutive trading days and once again breaking below the USD 2370 support level.

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 2372-2375.
  • Key support levels to watch in the short term are around 2324-2330.

WTI Crude Oil >>  

On Wednesday, under the combined influence of rising US commercial crude inventories, a stronger dollar, and easing geopolitical tensions, oil prices fell by 3%, hitting a new low for over two weeks.

WTI crude oil declined for a second consecutive trading day, ultimately closing down by 3.46% at USD 82.26 per barrel, marking the lowest since April; Brent crude oil fell by 2.93% to USD 87.38 per barrel.

US EIA crude oil inventories increased by 2.73 million barrels to 460 million barrels, nearly double the 1.4 million barrels expected by market analysts. Meanwhile, EIA data showed disappointing US gasoline demand, with the four-week average dropping to levels not seen since 2022.

Additionally, geopolitical risks from the conflict between Iran and Israel eased, coupled with the Fed’s hawkish stance suppressing expectations of a rate cut, leading to a stronger dollar and putting pressure on oil prices.

Although there are significant tail risks that could lead to a sharp price surge, if they do not materialize, it suggests that crude oil may need to decline first before rising again.

Yesterday, oil prices were technically suppressed below the USD 85 level, undergoing repeated consolidation, before accelerating downward in the evening, ultimately breaking below the USD 83 level and reaching around USD 82.5 for the daily candlestick closure, indicating a downward breakthrough with a consolidation below.

Overall, prices faced resistance below the USD 86 level during the second rebound this week, encountering a downward acceleration in a bearish trend after being rejected.

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 84.0-84.5.
  • Key support levels to monitor in the short term are around 82.0-81.5.

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