Gold Reaches Three-Month High, Crude Oil Up 1% to Refresh Two-Week Highs

Federal Reserve Chairman Jerome Powell reiterated the stance that interest rates must remain at higher levels for an extended period, but indicated a lack of reasons to support a rate hike in November. As a result, the U.S. dollar declined, while the price of gold reached a near three-month high.

Investors assessed the prospects of an agreement between the United States and Venezuela, and oil performed poorly during the European session. However, after Powell’s speech hinted at no rate hike, oil prices surged, hitting a two-week high.

Gold >>

Jerome Powell, the Chair of the Federal Reserve, reiterated the stance that interest rates must remain at higher levels for an extended period. However, he also expressed a lack of support for a rate hike in November.

This led to a decline in the U.S. dollar and a surge in the price of gold, which reached a near three-month high. Gold rose by 1.37%, closing at $1,974.15 per ounce, returning to levels not seen since mid-July.

While Powell’s statements weighed on the U.S. dollar and boosted gold, the ongoing escalation of the Israel-Palestine conflict has provided significant support. The potential for Middle East conflict to intensify and impact the global economy has prompted more investors to turn to safe-haven assets, driving the rise in gold prices.

As the world faces two major conflicts, political uncertainty is on the rise, and the previously strong negative correlation between gold and bond yields has been broken.

From a technical perspective, after consolidating around the $1,945 level, gold continued to move higher with bullish momentum. During the Asian-European session, the price retraced slightly, stabilized around the $1,945 mark, and then saw a minor increase.

In the late U.S. session, it accelerated higher, breaking through the $1,957 level but facing some resistance, leading to a period of consolidation. Finally, during the early hours, gold made a strong one-sided move, retracing briefly to stabilize around the $1,949 level before rising to close at $1,975.

Technical Analysis:

Today’s short-term strategy for gold suggests focusing on buying the dips as the primary approach, with selling on rallies as a secondary strategy.

  • Key resistance levels to watch in the short term are around 1980-1990.
  • Key support levels to watch in the short term are around 1950-1940.

 

WTI Crude Oil >>

Investors are weighing the prospects of the U.S.-Venezuela agreement, with oil performing poorly during the European session. However, Powell’s speech, indicating no rate hike, led to a surge in oil prices, reaching a two-week high.

Brent crude futures settled up 1%, or $0.88, at $92.38 per barrel, while WTI crude futures settled up $1.05, or 1.2%, at $89.37 per barrel.

OPEC has pledged to reduce oil production by 2 million barrels per day by the end of 2024, and Saudi Arabia and Russia have agreed to further cut production by 1.3 million barrels per day until the end of this year. If the embargo is implemented, it will impact global oil prices.

With the escalating Israel-Palestine conflict, the global oil market is experiencing significant volatility. Market concerns over the involvement of Arab countries in the conflict could lead to a reduction or interruption of oil supply in the Middle East, causing a substantial increase in oil prices.

From a technical perspective, oil prices experienced early suppression followed by a rebound. During the Asian and European sessions, they quickly fell below the $86 level, continued downward to stabilize around $85.5, and then rebounded.

In the late U.S. session, prices fluctuated and surged to break through and hold above the early opening gap around $87. Overnight, the bulls accelerated their upward movement, breaking through the $89 level and reaching near $89.5, ending the session strongly.

Technical Analysis:

Today’s oil trading strategy suggests focusing on long positions on pullbacks, with short positions on high rebounds as a secondary approach.

  • Key resistance levels to monitor in the short term are around 90.5-91.0.
  • Key support levels to monitor in the short term are around 88.0-87.5.

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