Gold
On Tuesday, despite a stronger dollar and rising US Treasury yields, Fed Chair Jerome Powell’s comments to Congress stating that the US economy is “no longer overheating” and signaling a potential rate cut in September supported gold prices.
Spot gold stabilized with a dip to $2349.45 before rebounding and closing up 0.2% at $2363.82 per ounce. Investors are now focused on the US June inflation data, expected later this week, which could clarify the Fed’s rate path.
In his testimony, Powell acknowledged that inflation remains above the Fed’s 2% target but has shown improvement in recent months, suggesting that more positive data could justify a rate cut. He is set to give his semi-annual monetary policy testimony to the House Financial Services Committee today. Additionally, investors should keep an eye on geopolitical developments.
Gold Technical Analysis:
Yesterday, gold traded within a range of $2350-$2370. During the Asian and European sessions, prices briefly rebounded to $2368 before falling.
In the afternoon, gold tested the $2360 level, dropping to $2356 before stabilizing and rebounding. The US session saw an acceleration past $2371, followed by a pullback, with prices settling around $2350 by the close.
Today’s Focus:
- Short-term strategy: Favor shorting on rebounds and buying on pullbacks.
- Resistance: $2375-$2380
- Support: $2350-$2345
Oil
On Tuesday, oil prices fell over 1% and marked a third consecutive daily decline as traders learned that Hurricane Beryl was unlikely to cause long-term supply disruptions. Damage to a key oil production center in Texas was less severe than feared.
WTI crude closed down 0.57% at $81.74 per barrel, while Brent crude closed down 0.79% at $84.95 per barrel.
Several offshore production facilities were evacuated, ports were closed, and refining slowed. However, as Beryl weakened to a tropical storm, the impact on major Gulf Coast refineries appeared minimal.
Despite Powell’s indication of a potential rate cut, his comments led to a further decline in oil prices due to concerns that a weakening economy might hinder oil demand. Today’s focus will be on the EIA crude inventory data and geopolitical developments.
Oil Technical Analysis:
Yesterday, oil prices showed a pattern of rebound and resistance, closing lower. During the Asian and European sessions, prices fell below the $82 level, consolidating around $81.6. The US session saw a brief rebound to $81.7 before a quick recovery to $82.5, followed by a decline and lower close.
Today’s Focus:
- Short-term strategy: Favor buying on pullbacks and shorting on rebounds.
- Resistance: $82.5-$83.0
- Support: $80.5-$80.0
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