Market Recap
Gold extended its rally on Tuesday, climbing to a three-week high near $4,135/oz, as markets anticipated the end of the US government shutdown and the resumption of key economic data, which could strengthen the case for a Fed rate cut in December. Meanwhile, crude oil traded near $61/barrel, gaining on new US sanctions against Russia and optimism surrounding the potential reopening of the US government, though persistent oversupply concerns capped gains.
Gold
Spot gold rose 0.3% to $4,126.77/oz, its highest level in nearly three weeks. The rally was fueled by expectations that once the government reopens, the release of delayed US economic data could support a December rate cut. Traders now see a 64% probability of a Fed rate cut next month, according to market pricing.
Fed Governor Michelle Bowman added to the dovish tone, suggesting that given a weaker labor market and easing inflation, a 50-basis-point cut in December “may be appropriate.”
The Senate’s approval of a compromise funding deal marked a key step toward ending the longest US government shutdown in history. The data blackout has left both policymakers and investors struggling to assess economic conditions, heightening anticipation for the upcoming reports once data releases resume.
UBS noted that gold demand in 2024–2025 could reach its strongest level since 2011, citing both safe-haven buying and long-term structural demand as supportive factors.
Technical View:
Gold’s bullish momentum remains intact after a sharp breakout above consolidation zones. The metal formed a double bottom near $4,076 before surging to new highs. A close above $4,135 could open the door to further gains toward $4,150–$4,218.
Short-term support is seen at $4,090–$4,070, while a pullback to these levels could present new buying opportunities.
Today’s Outlook:
- Strategy: Buy on dips, sell on rebounds.
- Resistance: $4,140–$4,160
- Support: $4,090–$4,070
Oil
Oil prices rose sharply on Tuesday, with Brent up 1.72% to $65.16/barrel and WTI up 1.51% to $61.04/barrel, supported by fresh US sanctions on Russia and progress toward ending the US shutdown. However, concerns over global oversupply continued to limit the upside.
Reports indicated that Lukoil declared force majeure on its Iraqi operations — the first direct impact since the sanctions were imposed. The supply disruption supported prices temporarily, while India began seeking alternative crude sources, boosting expected exports from Saudi Arabia, Iraq, and Kuwait in December.
Sentiment also improved as the US House prepared to vote on a bipartisan funding bill to end the shutdown, following Senate approval earlier in the week.
Still, analysts cautioned that OPEC+ output growth and robust non-OPEC production would keep markets well supplied. Commerzbank warned that “the oil market will face considerable oversupply next year, maintaining downward pressure on prices.”
Technical View:
From a daily perspective, oil remains range-bound after multiple attempts to break higher. The MACD indicator suggests mixed momentum, with short-term consolidation between $59.30–$61.50 likely to continue. Analysts expect sideways trading until a clear breakout occurs.
Today’s Outlook:
- Strategy: Buy on dips, sell on rebounds.
- Resistance: $62.5–$63.5
- Support: $59.5–$58.5
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