Weakness in Dollar Index Boosts Gold Prices, Oil Rises Nearly 1%

The U.S. GDP growth rate for the first quarter, released on Thursday, fell short of market expectations, dragging the dollar index to a near two-week low, thereby boosting gold prices.

Market concerns arose as Israel intensified airstrikes on Gaza, raising worries about supply disruptions in the Middle East region. Additionally, U.S. Treasury Secretary Yellen stated that the U.S. economy is performing well, leading to a nearly 1% rise in oil prices.

Gold >>

On Thursday, the U.S. GDP growth rate for the first quarter fell short of market expectations. Supported by the weakening of the U.S. dollar index, spot gold rebounded, reaching as high as USD 2344 and ultimately closing up by 0.72% at USD 2331.60 per ounce.

The U.S. dollar index fell by 0.23% on Thursday, closing at 105.57, with an intraday low of 105.46, marking a new low since April 12.

Previous data had shown a greater-than-expected slowdown in U.S. economic growth for the first quarter, but rising inflation suggests that the Federal Reserve may not cut interest rates before September. If this trend persists, it will put the Federal Reserve in a dilemma.

Federal Reserve Chairman Powell recently admitted that the battle against inflation has not yielded the expected results, implying that interest rates may remain relatively high for a longer period. Federal Reserve officials have also successively expressed “hawkish” views on this matter.

This consistent stance of the Federal Reserve significantly dampens expectations of interest rate cuts, leading to a further reduction in expectations for the magnitude and timing of rate cuts. Therefore, if Friday’s PCE data is strong, it may put pressure on gold, continuing its trend of adjustment and retreat.

Yesterday, gold experienced wide-ranging fluctuations in both directions on the technical front. In the Asian session, after a slight rebound from the opening, it encountered resistance at the USD 2321 level, followed by accelerated downward movement by the bears.

During the European session, gold stabilized around the USD 2305 level, rebounded from the bottom, oscillated higher, and broke through the USD 2321 level again with a strong rebound.

In the late U.S. session, influenced by the initial claims for unemployment benefits, gold prices rose slightly, breaking through the USD 2334 level, but then faced resistance and retreated, fluctuating downward to stabilize around the USD 2312 level before rising again.

Finally, in the early morning hours, gold experienced a second surge, breaking through the USD 2344 level, but facing resistance and fluctuating before closing.

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 2345-2350.
  • Key support levels to watch in the short term are around 2312-2307.

WTI Crude Oil >>  

On Thursday, due to Israel’s intensified airstrikes on Gaza, raising concerns about disruptions to supply in the Middle East region, and U.S. Treasury Secretary Yellen’s positive remarks on the U.S. economy, WTI crude oil futures closed up by USD 0.76 or 0.9% at USD 83.57 per barrel.

Brent crude oil futures also closed higher by USD 0.99 or 1.1%, settling at USD 89.01 per barrel.mIsrael escalated its airstrikes on Rafah overnight, previously announcing the evacuation of civilians from southern Gaza cities and launching a comprehensive attack.

Despite warnings from its allies of potential significant casualties, oil supply has not yet been affected. Yesterday, oil prices experienced technical fluctuations, forming a deep V-shaped bottom and rebounding.

During Asian and European trading, prices fell and fluctuated below the USD 83.3 level, but stabilized and rebounded during the late U.S. session after a second retest of the USD 82 level, showing bullish strength in the deep V-shaped rebound.

In the early morning hours, oil prices continued their upward momentum, breaking through and sustaining above the USD 83.3 level, closing with strength.

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 85.0-85.5.
  • Key support levels to monitor in the short term are around 82.5-82.0.

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