Gold Weekly Declines for Second Consecutive Week, Crude Oil Rises for Third Week to Reach New Highs

Gold saw a slight increase last Friday, but due to hot inflation data and the prospect of the Fed cutting interest rates early cooling down, gold recorded a second consecutive weekly decline with a 0.51% drop last week.

Tensions in the Middle East intensified, overshadowing the increasingly weakened hopes for interest rate cuts and the bleak demand outlook for this year, resulting in crude oil rising for two consecutive weeks, hitting a near three-week high.

Gold >>

Last week, gold saw a slight increase last Friday, but due to hot inflation data and the cooling prospect of the Fed cutting interest rates early, gold recorded a second consecutive weekly decline.

Spot gold plunged nearly USD 10 after the release of US January PPI data last Friday, then rebounded again, ultimately closing up 0.44% at USD 2013.23 per ounce; COMEX gold futures rose 0.5% to USD 2,024.10 per ounce.

After the cooling of hot inflation data and the prospect of early Fed rate cuts, gold prices fell for the second consecutive week. Data showed that both the US January Producer Price Index (PPI) and last month’s Consumer Price Index (CPI) exceeded expectations.

Although gold is considered an inflation hedge, higher interest rates have weakened the appeal of non-yielding bullion. The market currently expects a 73% chance of a rate cut in June.

Apart from weekly jobless claims and a few Fed speakers, there are no major economic data releases scheduled for this week, with the minutes from Wednesday’s FOMC meeting being the only significant event.

Gold prices fluctuated last Friday, initially falling slightly during the Asian-European session pressure to below the 2006 level, then quickly dropping below the 2000 mark in the late US session to stabilize around 1995 before rebounding.

After 23:00, gold quickly bottomed out and rose, breaking through and holding above the morning’s opening gap around 2007, continuing its rebound, and finally closing above the 2014 level, ending the day with a bullish tone in a two-day consecutive trading session of fluctuating rebound.

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 2025-2030.
  • Key support levels to watch in the short term are around 2007-2002.

WTI Crude Oil >>

Last week, weaker-than-expected US retail sales data initially dampened hopes of the Federal Reserve quickly starting rate cuts in the coming months, but tensions in the Middle East offset forecasts of demand slowdown by the International Energy Agency, resulting in higher oil prices for two consecutive weeks.

Last Friday, WTI crude oil closed up 0.81% at USD 78.16 per barrel; Brent crude oil closed up 0.58% at USD 83.22 per barrel.

A weaker US dollar typically boosts oil prices, making oil cheaper for investors holding other currencies. The US Census Bureau reported a 0.8% month-on-month decline in retail sales in January, marking the largest drop since March 2023.

December data was revised down to an increase of 0.4% from the previously reported 0.6%. This data sparked optimistic expectations for the Fed to cut rates earlier, which could have a positive impact on oil demand.

Overall, oil prices saw technical consolidation last Friday, with slight retracement during the Asian-European session before stabilizing around the 77.2 level and witnessing bullish rebounding.

Followed by further upward movement during the late US session, breaking through and holding above the 78.3 level for a strong rebound, ultimately closing near the high point around 79.

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 79.5-80.0.
  • Key support levels to monitor in the short term are around 77.0-76.5.

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