Gold Edges Lower, Russia Plans Further Output Cuts To Extend Oil Price Rally

After a week of gains, gold has started to retreat, accompanied by a strong surge in the U.S. dollar index, causing a slight dip in gold prices. Russia’s announcement of potential further cuts in oil exports in October has boosted crude oil, extending its six-day upward trend, with a closing gain of around $2.

Gold >>

On Thursday, there was significant volatility in the U.S. stock market, accompanied by a decline in U.S. bond yields and an increase in the value of the U.S. dollar.

The market was in the process of analyzing mixed economic data and waiting for the crucial non-farm payroll figures to assess the outlook for Federal Reserve policies. As a result of corrective movements following this week’s surge and a robust rise in the U.S. dollar index, there was a minor decrease in gold prices.

Market analysts suggest that if the year-on-year growth rate of the July Core PCE Price Index falls short of expectations, the probability of the Federal Reserve postponing rate hikes in September will rise.

This, in turn, could weaken the U.S. dollar and boost gold prices. Conversely, if the PCE data exceeds expectations, the U.S. dollar could gain strength, potentially impacting gold prices negatively.

Yesterday, gold’s technical situation remained constrained below $1948, exhibiting fluctuations during the Asian-European sessions. Although it briefly breached the $1947 level, persistent suppression led to a decline and consolidation.

In the late U.S. session, it surged again but remained below the $1948 threshold, triggering another decline. During the early hours, the downward trend persisted, approaching the $1939 level and nearly closing at the lowest point of the day.

Technical Analysis:

Gold’s trading strategy for today suggests a preference for short positions on rebounds and minor long positions on pullbacks.

  • Key resistance levels to watch in the short term are around 1950-1955.
  • Key support levels to watch in the short term are around 1920-1925.

WTI Crude Oil >>

Crude oil has marked its sixth consecutive day of gains as Russia’s Deputy Prime Minister emphasized the upcoming OPEC+ decision next week. The oil price exhibited significant volatility but ultimately rose by $2, putting pressure on the USD/CAD pair.

China’s latest Manufacturing PMI data for August slightly exceeded market expectations, alleviating concerns about demand. Additionally, this week’s U.S. data has dampened expectations of further rate hikes by the Federal Reserve.

With EIA crude oil inventories dropping substantially and Russia considering further cuts to oil exports in October, alongside the possibility of Saudi Arabia extending production cuts into October, short-term oil prices have potential for further increases.

In terms of technical analysis, oil prices maintained recent bullish momentum, surging above key levels. During the Asian and European sessions, the support above $81.50 held strong, propelling prices upwards.

This bullish trend continued into the European afternoon, breaking through and holding above $82, then further accelerating during the U.S. session to breach the $83 mark and closing near $83.50, marking the day’s peak.

Technical Analysis:

For today’s short-term trading approach, it’s advisable to prioritize short positions during upward rebounds and consider minor long positions on downward pullbacks.

  • Key resistance levels to monitor in the short term are around 84.5-85.
  • Key support levels to monitor in the short term are around 81.8-82.3.

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