Market Recap
On Wednesday, the Federal Reserve cut interest rates by 25 basis points as expected, sparking volatility in precious metals and energy markets. Spot gold, after touching an all-time intraday high of $3,707.35 per ounce, quickly reversed gains and closed down 0.8% at $3,659.79. Crude oil prices also ended a three-day winning streak, with WTI falling 0.90% to $63.96 per barrel and Brent down 0.85% to $67.92.
The Fed’s move was not a surprise but was widely seen as a direct response to labor market weakness. Chairman Jerome Powell’s comments about a “meeting-by-meeting approach” were interpreted as signaling uncertainty, triggering profit-taking in gold, which has already surged 39% year-to-date and more than 6% in September alone.
Recent US data, including weaker housing starts and permits in August, underscored risks to the labor market. Surplus unsold homes, falling mortgage rates failing to lift demand, and slower hiring with potential layoffs have all raised red flags for policymakers.
Gold Highlights
Gold’s rally lost steam after Powell’s remarks unsettled investors. The daily chart showed a volatile session: prices dipped below $3,660 before rebounding, then closed lower with a bearish reversal pattern near the $3,700 level.
Gold Technical Outlook:
Gold – Key Levels to Watch
- Strategy: Sell on rallies, buy on dips.
- Resistance: $3,685–$3,695
- Support: $3,650–$3,640
Oil Highlights
Crude oil retreated as traders weighed the Fed’s rate cut and the latest US Energy Information Administration (EIA) data. WTI settled below $64, while Brent slipped under $68. The Fed hinted at continued easing later this year to counter slowing employment, which in theory supports economic activity and energy demand.
Rystad Energy’s Chief Economist Claudio Galimberti noted that while OPEC+ is gradually unwinding supply cuts, further Fed rate reductions this year could offset supply-side pressure and provide support for Brent.
EIA data showed a sharp drop in US crude inventories due to lower imports and near two-year-high exports. However, a surprise 4 million barrel increase in distillate stocks—well above expectations of 1 million—raised concerns about weak end-user demand.
Technically, crude failed to extend its prior rebound, facing resistance at $64.6 before retreating. The daily chart closed with a bearish reversal, reflecting ongoing wide-range volatility.
Oil Technical Outlook:
Crude Oil – Key Levels to Watch
- Strategy: Buy on dips, sell on rallies.
- Resistance: $65.5–$66.5
- Support: $63.0–$62.0
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