After the dollar weakened, the price of gold changed little as traders weighed how to contain the oil supply shock triggered by the war in the Middle East.
Gold prices approached $5,000 an ounce in early trading, after falling 0.3% in the previous trading day. Oil prices rebounded after falling on Monday as investors assessed the release of emergency reserves in response to the growing threat to energy infrastructure. Meanwhile, the dollar index dropped 0.6%. US President Trump called on other countries to help ensure the security of the Strait of Hormuz, where crude oil transportation has almost completely halted.
The US-Iran war has entered its third week. On Monday, Tehran attacked multiple targets along the Persian Gulf coast, including an important oil hub and a large gas field in the United Arab Emirates. Meanwhile, Trump threatened to expand the scope of strikes on Iran’s Hormuz Island to target its oil infrastructure.
As the conflict persists and the threat of inflation intensifies, the possibility of the Federal Reserve cutting interest rates is becoming increasingly remote. Traders now almost unanimously believe that there is no chance of a rate cut at this week’s Federal Reserve meeting. Rising borrowing costs typically put pressure on precious metals that do not pay interest.
Although it has pulled back recently, gold has still risen by about 16% this year. Geopolitical uncertainties and the threat to the independence of the Federal Reserve have supported the demand for safe-haven assets. Long-term concerns about stagflation (coexistence of slow economic growth and high inflation) are beneficial to gold, enhancing its appeal as a store of value.
Technical analysis:
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Gold: The overnight price continued to hit new lows twice before rebounding. However, it did not effectively break through the trigger condition of our blue zone at 5038. The price is currently in a sideways consolidation pattern, attempting to challenge the resistance zone of 5038/40. If a breakthrough is achieved within the day, a short-term long position can be considered. For detailed positions, please consult the plugin.
(Gold 15-minute chart)
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Nasdaq: In the previous article, we clearly reminded that if the price recovers to 24,500, it could rebound to the 24,650/24,700 range. The price rebounded to a high of 24,799 overnight and is currently retracing to seek confirmation of support. We recommend focusing on the 24,400/24,450 range for liquidity sweeps and then catching the rebound signal. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: Yesterday, the price dropped from around 102 to around 93, with an amplitude of nearly 10%, which is in line with our prediction of wide fluctuations in crude oil. Within the day, the price rebounded from around 93 to recapture the 95/96 level and may attempt to break through 98/99. We suggest waiting for the upward sweep to complete and then look for short signals when it falls back. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
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