Gold
On Monday, the “Trump trade” continued, driving the USD to its highest level since early July. This pressured gold prices, which briefly fell near the $2,610 mark before closing down 2.39% at $2,619.53 per ounce.
The USD index strengthened on Monday, rising 0.5% to reach 105.7, its highest level since July, reducing gold’s appeal for non-USD investors. Market expectations suggest that the Trump administration’s policies could further support the dollar.
Daniel Ghali, a commodity strategist at TD Securities, commented, “The market is focused on the second-order effects of the red wave. There’s an expectation of early tariff increases under Trump, leading to strong demand for USD and impacting gold negatively.”
Geopolitical risk reduction and profit-taking also pressured gold. Reports indicated that Israel’s cabinet agreed on a framework for a ceasefire with Lebanon, suggesting easing tensions in the Middle East. Additionally, data showed a significant outflow of over $1 billion from SPDR Gold Trust, the world’s largest gold ETF, marking the largest weekly outflow since July 2022.
Today, investors will keep an eye on the “Trump trade,” geopolitical developments, the U.S. NFIB Small Business Optimism Index for October, and speeches from FOMC voting members, including Richmond Fed President Barkin.
Gold Technical Analysis:
Gold saw a significant decline on Monday, with a downward breakout after testing resistance at $2,685. The price dropped below key levels, ending with a bearish candlestick as it reached the $2,610 zone. The overall trend remains bearish, with resistance at the $2,680 level proving strong.
Today’s Focus
- Resistance: $2,635-$2,645
- Support: $2,600-$2,590
Oil
On Monday, oil prices continued to decline after reports indicated that Israel’s cabinet had agreed on a ceasefire framework with Lebanon, potentially easing Middle East tensions. WTI crude futures closed down over 3.32%, at $68.04 per barrel, while Brent futures fell 2.76%, closing at $73.87.
Israel’s new foreign minister announced that progress had been made toward a truce between Israeli forces and Hezbollah in Lebanon. Last month, U.S. officials submitted a draft plan calling for a 60-day ceasefire and withdrawal of forces from southern Lebanon.
The strong USD and reduced hurricane impacts also pressured oil prices. Analysts suggested that if upcoming inflation data supports further Fed tightening, the USD could strengthen further, putting more pressure on oil prices. Meanwhile, concerns over Gulf of Mexico production disruptions eased as hurricane Rafael’s impact was limited.
Additionally, there are indications that Saudi exports might decrease in December due to weak demand. Sources in the trading industry reported that major refiners are cutting imports due to low refining profits and weak fuel demand. Saudi Aramco’s recent reduction in official crude prices to Asia also indicates lukewarm demand expectations.
Today, investors should focus on the OPEC monthly oil market report, updates on geopolitical events, and speeches from Fed officials.
Oil Technical Analysis:
Oil faced strong selling pressure on Monday, breaking below $70.5 and closing near the day’s lows around $67.2, marking a bearish continuation. Oil remains in a weak downtrend, facing resistance around the $70 level.
Today’s Focus:
- Resistance: $68.7-$69.8
- Support: $66.5-$66.0
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