Nick Goold
Gold
Gold started the week with positive momentum above the 10-day moving average and tested the one-month high resistance level at $1,946 might last week. Speculators were bullish ahead of the Federal Reserve's impending announcement on expectations of an unchanged interest rate policy.
The Federal Reserve, in its recent update, decided to maintain the status quo on interest rates. Yet, the indication that the Fed will keep interest rates during 2024 higher than initially expected caught market participants off-guard. This revelation prompted a swift reaction from gold traders, who aggressively offloaded gold holdings. Despite this knee-jerk selling, gold concluded the week with a marginal gain despite the strong USD and the 10-year U.S. bond yield rising to levels not seen in 16 years.
Gold will likely remain volatile in the week ahead with a series of crucial U.S. economic data releases. Despite challenges like a strengthened USD and elevated interest rate yields, gold has demonstrated commendable resilience lately. Current market conditions suggest that range trading may be the most judicious approach, emphasizing capitalizing on buying opportunities. Should the forthcoming U.S. economic data disappoint, it could result in a swift rally in gold prices.
Resistance: 1925, 1946, 1984, 2000
Support: 1900, 1893, 1870, 1830
WTI
WTI experienced a bullish momentum at the week's onset, propelled primarily by Russia's interim embargo on gasoline and diesel exports to most nations—a move likely to constrict supplies. This surge was also mirrored in the sentiments of market speculators; the U.S. Commodity Futures Trading Commission highlighted that money managers augmented their net long U.S. crude futures and options positions in the week leading up to September 19. Goldman's optimistic forecast of Brent oil reaching $100 further solidified the prevailing positive sentiments, aligning with several other analysts predicting higher prices for WTI.
Despite the consistent uptrend, WTI's rally encountered a minor hiccup due to profit booking. This arose after U.S. Federal Reserve officials signalled potential interest rate hikes, even though the benchmark federal funds rate remained unaltered in their recent meeting. The prospect of escalating interest rates, which inadvertently inflate borrowing expenses, poses risks of decelerating economic progress. Such a slowdown could dampen oil demand, instigating traders to cash in on their profits.
The forthcoming week promises to be eventful for the WTI market. The consistent support at the 10-day moving average suggests a northward price trajectory. Given the existing market dynamics, scouting for buying opportunities is the most judicious approach. However, with the market currently exuding a strong bullish demeanour and heavily laden with long positions, a breach below the 10-day moving average might incite more profit-taking. Such a scenario could present selling opportunities for day traders.
Resistance: 94.00, 100.00
Support: 89.00, 85.00, 83.50, 78.50, 75.00, 70.00
