U.S. Job Market Cools, Gold Soars; Inventory Plunge Boosts Oil Price by Over 1%

The U.S. July employment data signaled a cooling trend, approaching pre-pandemic levels. As a result, the U.S. dollar and Treasury bonds experienced a significant drop, while gold surged by over $15.

Additionally, due to reduced expectations of a Fed rate hike, hurricane threats, and a larger-than-expected drop in crude oil inventories, oil prices rose by more than 1%.

Gold >>

During Wednesday’s early Asian trading, gold opened at $1937.20 per ounce, stabilizing near a three-week high. It’s currently trading at $1935.94 per ounce.

Major U.S. employment data for July has started approaching pre-pandemic levels, indicating a cooling trend in the job market. This caused a significant drop in the US dollar and Treasury yields on Tuesday, with the 10-year Treasury yield hitting a two-week low. This helped gold surge by over $15, breaking through the key level near the 55-day moving average of $1931.5.

On Tuesday, gold climbed to a three-week high, exhibiting strong momentum and closing at this elevated level. After testing the vicinity of the low point at $1914 before the U.S. session, gold began a sustained rebound, notably breaking through the previous day’s high of $1926 and reaching a short-term high above the $1935 mark.

Spot gold closed on Tuesday at $1937.17 per ounce, up around 0.9%. It reached a daily high of $1938.16 per ounce and a low of $1914.39 per ounce. U.S. gold futures also gained 0.9%, closing at $1965.10 per ounce.

Technical Analysis:

For today’s short-term gold trading strategy, it’s advisable to focus on buying during pullbacks and consider shorting on rebounds.

  • Key resistance levels to watch in the short term are around 1940-1945.
  • Key support levels to watch in the short term are around 1918-1913.

WTI Crude Oil >>

Amid cooling expectations of a Fed interest rate hike, a weakening U.S. dollar, and the influence of a hurricane, international oil prices surged over 1% on Tuesday, with U.S. crude hitting a one-week high.

Oil prices climbed by more than $1 per barrel on Tuesday, propelled by a weakening U.S. dollar. Simultaneously, investors discussed the potential impact of Hurricane Idalia, set to hit Florida this week, on energy supply and demand.

Currently, the storm’s trajectory is situated to the east of most major oil and gas production and infrastructure, suggesting it might not significantly affect energy production. However, any westward shift in its path could alter this scenario.

The latest API data indicated a substantial decrease of 11.486 million barrels in U.S. crude inventories up to August 25, far exceeding market expectations of a 2.9 million barrel decline. This data provided further support to oil prices.

Brent crude futures rose by $1.07 on Tuesday, marking a 1.3% increase, closing at $85.49 per barrel. U.S. crude futures settled at $81.86 per barrel, climbing by $1.06 or 1.3%. Wednesday’s oil opening stood at $81.245 per barrel, sustaining its high level.

Yesterday’s rebound from a dip led to a strong bullish candle, breaking the prior high while avoiding a new low. This pattern suggests bullish continuity in the near future.

Technical Analysis:

Today’s short-term trading strategy suggests prioritizing long positions as the main approach, with shorting on higher rebounds as a secondary option.

  • Key resistance levels to monitor in the short term are around 82.0-83.0.
  • Key support levels to monitor in the short term are around 80.6-79.9.

 

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