Federal Reserve Maintains Interest Rates Unchanged, Gold Prices Turn Higher, US Crude Oil Breaks Below USD 80 Mark

The Federal Reserve announced maintaining interest rates unchanged and hinted at a “lack of further progress” in achieving the 2% inflation target. This caused the dollar and US bond yields to fall, while gold prices surged by over USD 30.

Unexpectedly, US crude oil inventories increased, there’s hope for a ceasefire agreement in the Middle East, and the prospect of recent interest rate cuts in the US possibly boosting oil demand weakened. As a result, oil prices plummeted by around 3%, with US crude oil breaking below the USD 80 mark.

Gold >>

On Wednesday, the Federal Reserve announced maintaining interest rates unchanged and hinted at a “lack of further progress” in achieving the 2% inflation target.

Following the Fed’s rate decision announcement and Chairman Powell’s remarks, the dollar and US Treasury yields fell, while gold prices surged by over USD 30. Spot gold fluctuated upward, reaching a high of 2328 and ultimately closing up by 1.5% at USD 2319.74 per ounce.

Earlier in the session, gold prices touched their lowest level since April 5th at USD 2281.56 per ounce, but reversed course to end higher as the US dollar fell by 0.3%, making gold cheaper for investors using other currencies. The yield on 10-year US Treasuries also declined.

Federal Reserve Chairman Powell indicated that the next move is unlikely to be a rate hike and added that the Fed’s focus has been on maintaining the current restrictive policy stance.

On the technical front, gold stabilized near the 2281 level yesterday, witnessing strong bullish momentum as it rebounded from the lows, broke higher, and closed above the resistance level.

During the Asian and European sessions, prices saw a slight retreat below the 2281 level before bouncing back, and during the European session, they rose steadily, breaking above and holding above the 2290 level, continuing the rebound.

In the late US session, despite bearish initial jobless claims data, gold prices rose instead of falling, breaking through and holding above the 2300 psychological level, continuing the rebound.

Finally, in the early hours of the morning, influenced by the Federal Reserve’s interest rate meeting, gold prices accelerated higher, breaking through the 2310 level and reaching near 2328 before closing strongly.

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 2335-2340.
  • Key support levels to watch in the short term are around 2300-2295.

WTI Crude Oil >>

On Wednesday, US crude oil inventories unexpectedly increased, hopes for a ceasefire agreement in the Middle East emerged, and the prospect of recent interest rate cuts in the US potentially boosting oil demand weakened.

WTI crude oil plummeted to a 7-week low, ultimately closing down by 2.92% at USD 79.05 per barrel, while Brent crude fell by 2.72% to USD 83.55 per barrel.

According to the report from the US Energy Information Administration (EIA), for the week ending April 26th, US crude oil inventories surged by 7.27 million barrels, marking the largest increase since early February.

This sharply contrasted with market expectations of a decrease of 2.3 million barrels and exceeded the 4.91 million barrel increase predicted by the American Petroleum Institute (API) on Tuesday.

Additionally, the EIA stated that US crude oil production rose from 12.58 million barrels per day in January to 13.15 million barrels per day in February, marking the largest monthly increase in nearly three and a half years.

On the technical front, oil prices faced downward pressure amidst volatile trading yesterday, closing below previous lows. During the Asian and European sessions, there was a slight rebound but it was capped below the USD 81.3 level, leading to further declines.

In the late US session, prices attempted a second rebound but faced resistance near the USD 81.5 level, resulting in another downward movement breaking below the USD 80 psychological level and reaching around USD 78.8 before closing 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 80.8-81.3.
  • Key support levels to monitor in the short term are around 78.0-77.5.

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