Inflation Data Slows: Gold Prices Dip Slightly, Oil Prices Drop Then Rise

The US dollar and US Treasury yields rebounded, but signs of cooling US inflation reinforced hopes for a Federal Reserve rate cut this year, keeping gold prices near a one-month peak with a slight drop of 0.39%.

The main US inflation data slowing caused the momentum of the oil price rebound to fade, leading to a slight decline in oil prices. However, EIA data showing a larger-than-expected decrease in oil inventories turned oil prices higher.

Gold >>

On Thursday, the US dollar and US Treasury yields rebounded, but signs of cooling US inflation reinforced hopes for a Federal Reserve rate cut this year, keeping gold prices near a one-month peak. Spot gold fell 0.39% to USD 2,376.49 per ounce, having earlier touched its highest point since April 19 at USD 2,397.19.

The US dollar rebounded from around its 100-day moving average on Thursday, closing up 0.2%. Earlier in the day, it had hit a multi-month low of 104.08, as data showed that US consumer prices in April rose less than expected.

A stronger dollar makes gold more expensive for holders of other currencies. Meanwhile, New York Fed President Williams stated that the positive news on cooling inflation is not sufficient to prompt the Fed to cut rates soon.

Yesterday, gold’s technical saw a rapid surge in the Asian session, breaking through the 2397 level but facing resistance and moving downward. In the afternoon, during the European session, it attempted another rebound but was suppressed around the 2394 level and fell back again.

In the evening, during the US session, initial jobless claims data provided a positive impact, but gold prices faced resistance at the 2386 level and weakened again, eventually continuing to fall to around 2370 before bouncing back slightly and closing with fluctuations.

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 2390-2396.
  • Key support levels to watch in the short term are around 2350-2356.

WTI Crude Oil >>

On Thursday, the slowdown in key US inflation data initially caused oil prices to drop before rebounding. WTI crude briefly fell to an intraday low of USD 77.73 but recovered all losses during the US session, climbing back above USD 79 and closing up 0.59% at USD 78.85 per barrel. Brent crude closed up 0.56% at USD 83.13 per barrel.

The lower-than-expected increase in the US Consumer Price Index (CPI) for April strengthened market expectations for a rate cut in September. Additionally, a significant decline in US retail sales suggested more room for policy easing.

A rate cut could weaken the dollar, making oil more affordable for holders of other currencies, potentially boosting demand. Data from the US Energy Information Administration (EIA) showed a larger-than-expected drop in US crude inventories.

For the week ending May 10, crude inventories fell by 2.5 million barrels to 457 million barrels, far exceeding analysts’ expectations of a 543,000-barrel decrease. This decline reflected increased refinery activity and rising fuel demand.

Yesterday, crude oil prices initially retraced and stabilized around the USD 78.2 level during the Asian and European sessions. Before the US session, bullish momentum pushed prices up, breaking and holding above the early session’s drop point of USD 79, and continuing upward to face resistance at the USD 79.8 level before closing with fluctuations.

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 80.5-81.0.
  • Key support levels to monitor in the short term are around 78.0-77.5.

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