Market Recap
On Tuesday, spot gold traded near $4,115/oz, plunging more than 5%, its steepest one-day drop in five years, as optimism grew over a potential U.S. government reopening and trade deal progress, prompting investors to take profits after a record rally.
Meanwhile, U.S. crude traded around $57.58/bbl, rising as traders reassessed the risk of a supply glut and awaited clearer signals on trade negotiations.
Gold
Gold suffered its sharpest one-day decline in five years as investors took profits following a historic surge driven by rate-cut bets and safe-haven demand.
Independent metals trader Tai Wong noted that while dip-buying continues, “the surge in volatility over the past week signals caution and likely encouraged short-term profit-taking.”
Jim Wyckoff, Senior Analyst at Kitco Metals, added that an improvement in overall risk appetite early this week “weighed on safe-haven assets.”
Analysts at Citigroup said expectations that the U.S. government shutdown may soon end and a trade agreement could be reached are likely to push gold into a short-term consolidation over the next few weeks.
Gold Technical outlook:
Gold’s recent moves highlight an emotional, volatility-driven market. The metal initially consolidated near $4,270, then unexpectedly surged to $4,381/oz before reversing lower. The pattern reflects a battle between bullish momentum and waning enthusiasm, while buyers remain active, volume and follow-through have weakened.
Analysts expect gold to enter a sideways correction phase, where sharp intraday swings persist but the likelihood of another major breakdown remains low.
Today’s Gold Outlook:
- Strategy: Sell on rebounds, buy on dips
- Resistance: $4,170 – $4,190
- Support: $4,100 – $4,080
Crude Oil
Oil prices rebounded Tuesday from a five-month low, as traders reassessed concerns about oversupply and awaited direction on ongoing trade tensions.
The recent selloff came after U.S. crude production hit a record high and OPEC+ reaffirmed plans to boost output, heightening fears of an oversupplied market.
However, Bjarne Schieldrop, Chief Commodities Analyst at SEB, said that “relatively low U.S. crude and distillate inventories are helping to offset some of the downward pressure.”
While trade disputes continue to cloud the global growth outlook, both sides have reportedly signaled interest in reducing tensions, providing modest support to sentiment.
Technical outlook:
On the daily chart, oil remains in a downward trend, with MACD lines diverging below zero and bearish momentum intact. On the 1-hour chart, prices touched a new low near $56/bbl, showing early signs of bottom divergence, as lower wicks suggest buying support at the bottom of the range.
Intraday movement is expected to remain volatile within a downward bias.
Today’s Outlook:
- Strategy: Sell on rebounds, buy on dips
- Resistance: $58.0 – $59.0
- Support: $55.5 – $54.5
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