Gold Prices Slightly Up, Oil Demand Concerns Eased, Both WTI and Brent Crude Rise Together

After the release of data by the United States, the yield on 2-year US Treasury bonds rose by about 4 basis points, causing gold prices to erase most of the day’s gains.

However, due to changes in the situation in the Middle East and increased safe-haven demand, gold prices were slightly boosted and closed higher.

Expectations for global economic growth were revised upwards, and the escalation of tensions in the Middle East offset concerns about oil demand, leading to gains in both US crude oil and Brent crude oil prices.

Gold >>

On Tuesday, gold prices rose slightly but pulled back from intraday highs. After touching a two-week high near USD 2050 per ounce, gold fell below the key level of USD 2040 per ounce.

Spot gold closed up 0.19%, at USD 2036.81 per ounce, while COMEX April gold futures settlement price rose 0.31%, closing at USD 2050.9 per ounce.

The escalating tensions in the Middle East boosted demand for safe-haven assets. However, the market is currently awaiting the policy decision from the Federal Reserve later this week to gather more clues about the timing of the first interest rate cut in the United States this year.

The Federal Open Market Committee (FOMC) responsible for interest rate setting will make its decision on Wednesday, following a dovish stance taken at its December meeting.

This FOMC meeting will provide guidance on when the first interest rate cut might occur and whether the Fed leans dovish or hawkish on monetary policy.

Investors should brace for significant volatility this week as the Fed’s interest rate decision will be announced after the release of the Institute for Supply Management (ISM) Manufacturing PMI and Non-Farm Payrolls (NFP) reports for December. These data points will influence the direction of gold prices.

Gold prices overall stabilized above the USD 2030 level and oscillated higher. During the Asian and European sessions, they oscillated upward, relying on the USD 2030 level, and accelerated higher in the afternoon, breaking through the USD 2040 level but faced pressure and fell back.

In the late US session, there were two subsequent pullbacks to around USD 2031, followed by accelerated rises and strength, eventually breaking through and holding above the USD 2040 level, continuing the rebound to USD 2048 before facing pressure and quickly falling back.

In the early morning, gold prices fell back to around USD 2029 before rebounding and oscillating at the close.

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 2045-2050.
  • Key support levels to watch in the short term are around 2025-2020.

WTI Crude Oil >>

On Tuesday, upward revisions in global economic growth expectations and an escalation in Middle East tensions offset concerns about oil demand.

WTI March crude oil futures closed up USD 1.04 per barrel, a 1.35% increase, at USD 77.82 per barrel, while Brent crude oil futures closed up USD 0.47 per barrel, at USD 82.87 per barrel.

The International Monetary Fund (IMF) raised its global economic growth forecasts, with the global GDP growth outlook revised from 2.9% to 3.1%.

Meanwhile, the IMF maintained its overall global inflation forecast for 2024 at 5.8% and lowered the forecast for 2025 to 4.4%, down from the previous forecast of 4.6%.

Oil prices showed strength after initially being suppressed. During the Asian and European sessions, prices oscillated lower around the USD 77.3 level. In the afternoon, they further declined, breaking below the USD 76 level and stabilizing around USD 75.8 before rebounding.

In the late US session, there was a swift rebound, forming a deep V-shaped recovery. Overnight, oil prices continued to rise, breaking through and holding above the USD 77.3 level, extending gains to around USD 78.1 per barrel and closing strongly.

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 79.0-80.0.
  • Key support levels to monitor in the short term are around 76.0-75.0.

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