Analysis of Gold News: On Tuesday (November 7th), gold prices hit a two-week low in the US market, losing momentum due to a safe haven rebound triggered by tensions in the Middle East, and market focus shifted to interest rate implications from Federal Reserve officials. As of press release, spot gold is currently trading at 1963.69 US dollars per ounce, with a daily decline of 0.72%. Due to the expectation that the Federal Reserve will complete interest rate hikes and gold prices remain at these levels, the earlier the first rate cut is predicted, the better the impact on gold prices. The lower interest rates have enhanced the attractiveness of zero yield gold, with a focus on Chairman Jerome Powell's speeches on Wednesday and Thursday, as well as other Federal Reserve officials who will deliver speeches this week.
Federal Reserve Chairman Jay Powell's comments on Wednesday may drive further action in the US dollar and bond markets. Powell may give an idea as to whether investors should expect further interest rate hikes this year to ensure inflation returns to the Federal Reserve's 2% target. Federal Reserve Governor Cook stated on Monday that the current interest rate policy is sufficiently restrictive to achieve price stability; On the other hand, it is reported that Federal Reserve Chairman Kashkari expressed the opposite view in an article published in the Wall Street Journal on the same day. The Federal Reserve's Kashkari reiterated on Tuesday that if inflation starts to rebound, it will tell me that the Fed's work is not yet complete. He added that the labor market is strong and there is no meaningful evidence that the economy is weakening. Due to the conflict between Israel and Hamas, gold prices hit a nearly 5-month high in October. The recent decline indicates that investors are becoming less concerned about geopolitical issues. The price of gold has regained some of its lost ground in the US market, but with geopolitical tensions not further escalating, broader demand for safe haven has still weakened. The recovery of the US dollar and long-term bond yields will continue to weigh on precious metals. Although investors expect that the Fed's interest rate tightening action will end, the gold price is still weak due to the gradual easing of consumer inflation and the rise of treasury bond bond yields, which led to a significant tightening of the financial situation.
FXStreet analyst Dhwani Mehta pointed out that as the US dollar recovers, gold prices have expanded their decline. The US dollar index is currently trading around 105.50, rising by approximately 25 points during the day.
From the gold daily chart, it can be seen that the gold price has fallen below the triangular pattern. Traders are waiting for the return of publicly available Federal Reserve policymakers to seek new trading momentum.
The outlook of Federal Reserve officials for future policies may be closely monitored. The hawkish statements made by Federal Reserve Chairman Powell last week were lower than expected, thereby dampening hopes of a rate hike in December.
On Monday, Federal Reserve Governor Cook expressed her hope that the Fed's current target interest rate is sufficient to bring inflation back to its target level of 2%.
Mehta said that on Tuesday, Federal Reserve Governor Warren and New York Fed Chairman Williams will deliver speeches, and any hints about interest rate trends will have a significant impact on the US dollar and gold prices. The trend of the bond market will also be monitored.
Mehta added that the main event risk for this week is expected to be the speeches of Federal Reserve Chairman Powell on Wednesday and Thursday, his first appearance after the November Fed meeting.
Analysis of the Prospects of Gold Technology
The daily chart shows that gold sellers are demonstrating their strength, and gold prices have fallen below an upward triangle. In addition, gold prices fell below the key short-term support of $1970 per ounce, which was also the low point on November 1st.
According to Mehta, after failing to hold onto $1970 per ounce, the gold price will target the 21 day Simple Moving Average (SMA) of $1966 per ounce.
The next support level for gold prices is expected to be $1963 per ounce. If it falls below this support, it will pave the way for gold prices to fall to a psychological level of $1950 per ounce.
Mehta stated that due to the relative strength index (RSI) index remaining above 50 on the 14th, the downward trend of gold prices appears to be short-lived.
On the upside, Mehta stated that gold buyers need to continue to break through the resistance level of $1981 per ounce in order to attempt a rebound. If it continues to rise, then Monday's high of 1993 US dollars per ounce will be challenged.
Afterwards, gold prices broke through the $2000/ounce barrier, which is crucial for initiating a meaningful upward trend and reaching a several month high of $2009/ounce, which is the resistance level of the horizontal trend line.
Yesterday, gold fell below its lowest point in recent weeks, hitting the 1957 line at its lowest. However, there was a small rebound in the US market, reaching a high near 1968. A rebound indicates that gold will undergo some technical recovery. The rebound above suppresses our focus on the 1970-1972 line, but bulls are not very strong. Bulls are actually trying to build momentum because the technical trend is still bearish, and gold is still in a slow decline process, As long as there is no strong pullback, we are not worried about the long lateral trading time, because the longer the holding time is, the greater the downward force will be. Overall, the gold market is currently in a relatively weak state.
From the perspective of the gold daily chart, the random indicator has a dead cross downward, but the MACD indicator has not yet formed a dead cross closure, and there is a possibility of a sharp decline. Although gold is still above the trajectory of the Bollinger Belt channel, it has not been able to effectively break through the $2000 mark in the past week after rising slightly above the 2000 mark on October 30th. It is necessary to pay attention to the continuation of the bearish trend. From the 4-hour chart of gold, it can be seen that after yesterday's round of rising and falling, the gold price has now returned to the position below 1970. On the 4-hour chart, the MACD signal line has a dead cross downward, and there is a tendency to be short in the short term. Please continue to pay attention to the initial support area mentioned last week at $1955- $1953. This region has fallen, and the decline in consolidation will further test the support of prices such as 1930 and 1900.
Focus on the 1977 to 1975 line of resistance above,
Follow the 1953-1950 frontline support below.
Analysis of crude oil news: On Tuesday (November 7th) in the US market, crude oil prices were trading around $77.14/barrel. Due to concerns about further interest rate hikes by the Federal Reserve easing, oil prices rose slightly, despite expectations of several economic data this week that made traders nervous. The main supply countries Saudi Arabia and Russia have stated that they will continue to reduce production until the end of the year, indicating a tightening of the oil market, which is also encouraged by the prospect of supply tightening. The Saudi Arabian Ministry of Energy announced on Sunday that it will continue to voluntarily reduce production by an additional 1 million barrels per day in December to maintain production at around 9 million barrels per day. Russia also announced that it will continue to voluntarily reduce exports of crude oil and petroleum products by 300000 barrels per day until the end of December. This announcement indicates that Saudi Arabia is working hard to tighten the market and raise prices. Due to the seasonal weakness of oil demand at the beginning of each year, concerns about sustained economic growth, and support from oil producing countries and OPEC+for the goal of stabilizing and balancing the oil market, the production reduction may be extended until the first quarter of 2024. There are reports that Russia and Saudi Arabia have reached a firm agreement to maintain the same supply restrictions until the end of the year, but demand for fuel remains stronger than most analysts expected, thus maintaining a good bid below crude oil prices.
Market News Analysis
Oil prices fell by over 4% on Tuesday, after China's exports fell for the sixth consecutive month, highlighting the slowdown in global demand.
Analysts say the prospect of a broader conflict in the Middle East remains a concern about the oil outlook. This has led Brent crude oil futures to reach a closing price below $84 per barrel, marking the first time since the post conflict surge in prices between Palestine and Israel on October 7th. Dennis Kissler, Senior Vice President of BOK Financial Trading, said, "The market continues to focus more on demand disruption rather than escalating war tensions
Although the situation in the Middle East is worsening, OANDA analyst Craig Erlam said, "Traders will remain highly vigilant for signs of broader conflicts in the region that may disrupt supply, but these concerns seem to be receding
UBS analyst Giovanni Staunovo said that the recovery of OPEC oil exports has also increased the pressure on oil prices. Due to the seasonal decline in domestic demand in the Middle East, OPEC crude oil exports have increased by about 1 million barrels per day since the low point in August. It seems that there is too much supply to be absorbed by oil consuming countries, "Staunovo said
The latest forecast for refinery activity in China shows that production is expected to decline throughout November and December, bringing further downward pressure on prices. As the world's largest oil consumer, China's crude oil imports grew strongly in October, but the contraction rate of total exports of goods and services was faster than expected. CityIndex analyst Fiona Cincotta said, "These data indicate that China's economic outlook continues to decline due to deteriorating demand in the western region, China's largest export destination
The US Energy Information Administration now predicts that the country's total oil consumption will decrease by 300000 barrels per day this year, reversing the previously predicted increase of 100000 barrels per day.
The fading hope among investors for a global interest rate peak also helped boost the US dollar, making oil more expensive for holders of other currencies starting from recent lows.
Neil Kashkari, President of the Minneapolis Federal Reserve Bank, stated that the US central bank may have to take more measures to lower inflation to its target of 2%. Kashkari stated that it is too early to announce a victory over inflation, as a stronger US dollar may make oil demand more expensive for importers, thereby damaging oil demand. He also stated that the risk of excessive tightening of monetary policy is better than the risk of too little tightening, and he is concerned that inflation may rise again.
Investors are waiting for comments from Federal Reserve Chairman Jerome Powell on Wednesday and Thursday.
The oil market is concerned about both increased supply and declining demand, "said Mizuho analyst Robert Yawger." It's definitely not a tight market right now
The World Bank recently released a series of scenarios warning that if major oil producing countries experience a serious upgrade, oil prices may soar to over $150 per barrel, but its basic forecast for next year's oil prices is around the current level.
As Western economies continue to struggle with the impact of inflation, the decline in oil prices will be welcomed. Some economists warn that a new surge in oil prices may trigger a third wave of inflation issues. Higher oil costs not only make transportation costs more expensive, but also make the large production of factories more expensive.
Meanwhile, the short-term energy outlook released by the EIA today has accelerated the decline in crude oil prices. The report predicts that US crude oil production in 2023 will be 12.9 million barrels per day, compared to the previous estimate of 12.92 million barrels per day. The expected crude oil production in the United States in 2024 is 13.15 million barrels per day, compared to the previous estimate of 13.12 million barrels per day. Meanwhile, the report predicts that the WTI crude oil price in 2023 will be $79.41 per barrel, compared to the previous estimate of $79.59 per barrel. The expected WTI crude oil price in 2024 is 89.24 US dollars per barrel, compared to the previous expectation of 90.91 US dollars per barrel; The Brent price is expected to be $83.99 per barrel in 2023, compared to the previous estimate of $84.09 per barrel. The Brent price is expected to be $93.24 per barrel in 2024, compared to the previous estimate of $94.91 per barrel. EIA stated that although OPEC's reserve capacity has increased in 2023 and 2024, its expectations for Iraq's reserve capacity have been lowered by approximately 400000 barrels per day compared to last month's ST report. The EIA also predicts that the production reduction of OPEC+will continue until the end of 2024 and offset the production growth of non OPEC countries.
OPEC+is a group of major oil exporting countries and will hold its next meeting later this month. Saudi Arabia and Russia may decide to extend unilateral restrictions until next year. These production reductions are in addition to the production cuts sustained by other member countries of the oil cartel until 2024.
Yesterday, crude oil continued to retreat and close low on the small negative line, with weak consolidation in consecutive negative periods. Although it did not break the low point, it still closed at a low level after rebounding. The daily line broke the volatile pattern of yin yang exchange and is slowly consolidating and accumulating momentum. However, there is still a lack of kinetic energy for breaking through acceleration, and it is currently in the process of gaining momentum. Yesterday, we shorted at 82.0-82.20, accurately capturing the entry position of the highest point in the day. The 4-hour Tubulin Road closed parallel, and the pressure on the track was concentrated between 83.50 and 83.70, which is also the critical point for short-term step decline. Below this level, it remains bearish, while the lower track coincides with last week's low. Currently in the midst of potential breaking, yesterday's rebound is under pressure near the medium track, and today's short-term outlook will continue to focus on the downward track. Break down and take a closer look at the space. On the contrary, the upper critical point should focus on 83.70. If you break up, you need to adjust your thinking and maintain your high-altitude thinking unchanged before breaking down.
The upper short-term focus is on 78.5-78.8 frontline resistance, while the lower short-term focus is on 75.0-75.3 frontline support
