U.S. CPI Surpasses Expectations, Leading to Simultaneous Declines in Gold and Oil

Higher-than-expected U.S. core CPI data for September has led to increased concerns in the market about the Federal Reserve raising interest rates again. This has resulted in a rise in the U.S. dollar and U.S. bond yields, causing gold prices to spike and then retreat.

Additionally, due to the increased expectations of rate hikes and unexpectedly high U.S. inventories, crude oil prices have reversed their gains.

Gold >>

In early Asian trading on Friday, gold was trading near $1,870 per ounce. On Thursday, the U.S. CPI data boosted the U.S. dollar and bond yields, causing gold to oscillate higher before retreating.

Spot gold was at $1,868.67 per ounce, down 0.3% or $5.5 per ounce. December gold futures closed down 0.23% at $1,883.00 per ounce.

The U.S. CPI data for September showed a 0.4% increase in inflation compared to the previous month and a 3.7% increase from the same period last year.

This marked a slight slowdown from the 0.6% monthly increase in August but was on par with the 3.7% year-on-year price increase in August.

Higher-than-expected consumer price inflation in September led to gold surging and then retracing during the day, with a short-term drop below $1,875.

Gold opened the early session at $1,874.6, rallied, reaching a daily high of $1,885.1, but faced a rapid decline during the early U.S. session due to the impact of U.S. CPI data. The daily low reached $1,867.8, and the day closed at $1,868.8.

Technical Analysis:

Today’s short-term strategy for gold suggests a preference for long positions on pullbacks, with short positions on rebounds.

  • Key resistance levels to watch in the short term are around 1880-1885.
  • Key support levels to watch in the short term are around 1860-1855.

WTI Crude Oil >>

In early Friday’s Asian session, WTI crude oil prices were trading near $83.41 per barrel. Oil prices experienced volatility on Thursday, reversing earlier gains, primarily due to the substantial increase in U.S. crude oil inventories reported last week, which overshadowed expectations of a peak in U.S. interest rates.

WTI crude oil fell by $0.58, a decline of 0.69%, to close at $82.91 per barrel. Brent crude oil futures rose by $0.18 to settle at $86.00 per barrel.

Political factors have led to a loss of support for oil prices, and the risk to oil supply continues to exist. Oil trading remains within the range established on Monday. A day after concerns about supply disruptions due to the Middle East conflict subsided, Saudi Arabia, OPEC’s largest oil-producing country, pledged to help stabilize the market.

Analysts suggest that the market is nervous about the potential spillover effects of the conflict on the broader Middle East region, and, as a result, oil prices are expected to remain in a short-term low-volatility range.

Crude oil reversed its mid-downward move from yesterday, ending lower, with no further sustained rebound. This contrasts with the distinct trend reversal observed in gold.

Previously, after declining from the high point of $95.0, crude oil had a continuous downward move, with no further upward momentum in the three trading days, followed by a rapid retraction of the rebound space on the fourth trading day, weakening its daily trend.

Technical Analysis:

In today’s oil trading strategy, it is advisable to focus on shorting during rebounds, with buying on dips as a secondary approach.

  • Key resistance levels to monitor in the short term are around 84.5-85.0.
  • Key support levels to monitor in the short term are around 82.3-81.8.

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Disclaimer 

While every effort has been made to ensure the accuracy of the information in this document, DOO Prime does not warrant or guarantee the accuracy, completeness or reliability of this information. DOO Prime does not accept responsibility for any losses or damages arising directly or indirectly, from the use of this document. The material contained in this document is provided solely for general information and educational purposes and is not and should not be construed as, an offer to buy or sell, or as a solicitation of an offer to buy or sell, securities, futures, options, bonds or any other relevant financial instruments or investments. Nothing in this document should be taken as making any recommendations or providing any investment or other advice with respect to the purchase, sale or other disposition of financial instruments, any related products or any other products, securities or investments. Trading involves risk and you are advised to exercise caution in relation to the report. Before making any investment decision, prospective investors should seek advice from their own financial advisers, take into account their individual financial needs and circumstances and carefully consider the risks associated with such investment decision.

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