Fed Pauses Hawkish Stance, Putting Pressure on Gold, Oil Sees Minor Retreat

Last week, gold opened high but closed lower as the U.S. Federal Reserve’s hawkish stance led to a stronger dollar, putting pressure on gold. The focus on the future trend of gold still rests on the performance of U.S. economic data.

Similarly, crude oil experienced a slight pullback from its highs due to the hawkish comments from the Federal Reserve, as market risk appetite cooled off.

Gold >>

On Friday, the closing price of gold stood at $1925.21 per ounce in the U.S. market. Last week, gold started on a high note but ended lower, with the pivotal moment being the Federal Reserve’s September interest rate meeting.

The Federal Reserve maintained its hawkish stance on monetary policy, further strengthening the U.S. dollar, which in turn exerted significant downward pressure on gold. The future trajectory of gold remains contingent on the performance of U.S. economic data.

Market analysts note that despite some optimism leading up to the decision, the Fed’s hawkish policy wasn’t well-received by gold bulls. Gold initially rose before the decision, matching earlier highs for the month, only to give back all gains on the day of the announcement, ultimately closing lower.

Currently, gold prices have seen a slight decline again, with the specific trend depending on traders’ interpretations of the Fed’s dot plot, potentially facing the risk of testing around $1900 per ounce, the lows from last week.

From a technical perspective, gold found stability around the $1920 mark last Friday, experiencing a rebound and consolidation. During the Asian and European sessions, it exhibited resilience above $1925, showing support against further declines. However, during the late U.S. session, it faced modest pressure after briefly breaking through the $1928 level, ending the day with oscillations.

Technical Analysis:

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

  • Key resistance levels to watch in the short term are around 1935-1940.
  • Key support levels to watch in the short term are around 1910-1915.

WTI Crude Oil >>

At the close of the U.S. market last Friday, crude oil prices settled at $90.35 per barrel. Crude oil, like other commodities, experienced a slight continuous pullback from its highs as market risk appetite cooled down following hawkish comments from the Federal Reserve.

Last week, oil prices entered a noticeable consolidation phase, pausing their earlier bullish run. However, the bullish sentiment in the oil market hasn’t completely faded. Fundamentally, the outlook remains supportive for oil prices, and there are no significant technical signals indicating a bearish trend.

Production cuts by oil-producing nations have tightened the global crude oil supply chain, and recent actions by Russia to restrict gasoline and diesel exports to countries outside its federation, Ukraine, Belarus, and Kazakhstan have added further strain.

This move particularly impacts the European region, as European energy imports will face increased competition from other consuming nations.

From a technical perspective, crude oil experienced an accelerated rally early in the week, reaching near the $92.4 per barrel level, marking a new yearly high. However, it subsequently saw a minor retracement and consolidation.

Despite finding support around the $88.3 per barrel level and staging a rebound on Thursday and Friday, the overall price continues to face resistance and consolidates in the range of $91 to $91.5 per barrel.

Technical Analysis:

Today’s crude oil trading strategy suggests a preference for buying on dips with a focus on lower levels, while considering short positions on high rebounds.

  • Key resistance levels to monitor in the short term are around 91.5-92.0.
  • Key support levels to monitor in the short term are around 89.3-88.8.

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