Rising Dollar Pressures Gold, Oil Hits 9-Month High

The U.S. dollar continues to strengthen, putting pressure on gold prices, causing them to decline. This week, the market is focused on several key economic data releases and statements from Federal Reserve officials.

Oil prices continue to rise to their highest levels in nine months due to ongoing supply cuts by major oil-producing countries.

Gold >>

On Wednesday, the U.S. dollar continued its upward momentum, currently trading near 104.85. Once again, gold faced downward pressure, boosted by robust U.S. economic data.

At the close of the U.S. market, spot gold was reported at $1919.09 per ounce, down $5.87 per ounce or 0.31%. It reached a daily high of $1929.18 per ounce and a low of $1915.23 per ounce. Gold futures closed down 0.44% at $1925.80 per ounce, while December gold futures closed down 0.43% at $1944.20 per ounce.

Overnight, Federal Reserve officials took a more hawkish stance, with Waller cautioning against prematurely assuming that the Fed has finished raising interest rates.

CME data indicates a 93.0% probability that the Fed will keep rates unchanged in the 5.25%-5.50% range in September, while market expectations for a November rate hike have diminished, and the anticipated start of rate cuts has shifted from July next year to June.

This week, the market is focusing on U.S. July trade data, August ISM Non-Manufacturing PMI, speeches from Federal Reserve officials, and the Fed’s Beige Book on economic conditions.

The strength of the U.S. dollar has been pushing gold prices lower. From a technical perspective, gold formed a bearish candlestick pattern yesterday, breaking the three-day consolidation phase seen in the daily charts. Gold failed to sustain a rebound and instead reversed its course.

Technical Analysis:

Today’s trading strategy for gold suggests a primary focus on short positions during rebounds, with long positions on pullbacks as a secondary approach.

  • Key resistance levels to watch in the short term are around 1930-1935.
  • Key support levels to watch in the short term are around 1910-1905.

WTI Crude Oil >>

The news of OPEC+ members Saudi Arabia and Russia deciding to extend supply constraints until the end of this year has continued to drive oil prices higher, reaching their highest levels in over 9 months.

U.S. oil breached the $85 per barrel mark, while Brent oil exceeded $90 per barrel. Crude oil prices rose by $0.81, a 0.94% increase, to $87.08 per barrel, and Brent crude oil saw a 0.67% increase, reaching $90.40 per barrel.

The Organization of the Petroleum Exporting Countries (OPEC) and its allies have implemented production cuts across the entire group, followed by additional voluntary production cuts, leading to a significant increase in oil prices this quarter.

As these production constraints are in effect, the International Energy Agency estimates that global crude oil consumption is growing at a record pace.

Crude oil continued its upward momentum yesterday, with daily charts indicating a push higher, followed by a retracement to neutral levels, resulting in a small bullish doji candlestick. While some potential for upward movement was released, the closing price remained relatively unchanged.

Technical Analysis:

Today’s short-term trading strategy for crude oil suggests giving priority to taking long positions on pullbacks to lower levels, with short positions on high rebounds as a secondary approach.

  • Key resistance levels to monitor in the short term are around 88.0-89.0.
  • Key support levels to monitor in the short term are around 86.0-85.0.

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