Investor Profit-Taking Drops Gold Over 1%, Improved Demand Boosts Oil Prices

Gold prices fell 1% as some investors took profits, and investors are awaiting key inflation data this week to gain more clues about potential rate cuts in the U.S. this year. Federal Reserve Chairman Jerome Powell is also scheduled to speak today.

Signs of improving demand from the U.S. and China, the world’s two largest oil consumers, helped oil prices rebound from a USD 1 drop in the previous trading session.

Key focuses for today’s trading include the OPEC monthly oil market report, U.S. March PPI data, API crude oil inventory data, speeches by Federal Reserve officials, and news related to Middle Eastern geopolitical situations.

Gold >>

On Monday, spot gold fell more than 1% during the day as some investors chose to take profits and stay on the sidelines before the data release. It lost support at the key levels of 2360, 2350, and 2340, ultimately closing down 1.04% at USD 2336.10 per ounce.

Investors are awaiting key inflation data this week to provide more clues about potential rate cuts in the U.S. this year, and Federal Reserve Chairman Jerome Powell is also scheduled to speak today.

Consumer prices in the first quarter were higher than expected, suggesting that the Federal Reserve might reduce the number of rate cuts this year. Subsequently, job growth in April was weaker than expected, leading investors to rekindle bets on two 25-basis-point rate cuts this year.

However, this view largely depends on softening inflation. The market’s focus this week will be on the U.S. PPI data to be released on Tuesday, followed by the CPI data on Wednesday.

Yesterday, gold experienced a unilateral decline in its technical performance. During the Asian and European sessions, a slight rebound was pressured around the 2364 level, leading to continuous oscillations and a downward trend.

In the afternoon, it accelerated further downward, breaking through the 2350 level and stabilizing around 2338 before rebounding. In the U.S. session, a second rebound was pressured around 2349, leading to further declines and a bottom-breaking 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 2354-2360.
  • Key support levels to watch in the short term are around 2320-2327.

WTI Crude Oil >>

On Monday, signs of improving demand from the U.S. and China, the world’s two largest oil consumers, helped oil prices rebound from the previous trading day’s USD 1 decline.

WTI crude oil prices approached the USD 80 mark during the day before giving up some gains, ultimately closing up 1.18% at USD 78.73 per barrel. Brent crude oil closed up 0.82% at USD 83.18 per barrel.

Key focuses for today’s trading include the OPEC monthly oil market report, U.S. March PPI data, API crude oil inventory data, speeches by Federal Reserve officials, and news related to Middle Eastern geopolitical situations. Strong expectations for U.S. gasoline demand provided support for oil prices.

On the supply side, investors are monitoring potential disruptions to oil supplies from western Canada due to wildfires, which the Canadian government has warned could be “catastrophic.”

Additionally, expectations that the OPEC+ alliance will extend production cuts into the second half of the year also supported oil prices.

Yesterday, the technical performance of oil prices saw stabilization at the USD 78 level, leading to a choppy upward correction. During the U.S. session in the evening, prices surged, briefly breaking above the USD 79.4 level before retreating and closing in a consolidation phase.

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 79.6-80.0.
  • Key support levels to monitor in the short term are around 77.0-76.4.

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