On Monday, ongoing geopolitical concerns and a weaker US dollar supported gold prices. Spot gold briefly surged to $2664.45 per ounce. However, ahead of the Federal Reserve’s meeting, cautious market sentiment and profit-taking limited gold’s gains, closing up by 0.16% at $2652.73 per ounce.
Oil prices, pressured by concerns over insufficient demand growth and investor caution ahead of the Federal Reserve’s decision, fell slightly from recent highs, with Brent crude futures closing at their highest since November 22nd.
Gold
Gold prices were supported by ongoing geopolitical concerns and a softer US dollar. On Monday, spot gold surged to $2664.45 per ounce, but ahead of the Federal Reserve meeting, market sentiment remained cautious, limiting the rise due to profit-taking. By the close, gold had gained 0.16%, settling at $2652.73 per ounce.
In the geopolitical sphere, Israel agreed on Sunday to double the population of its settlements in the Golan Heights, while maintaining that threats from Syria persist, despite the recent shift in rhetoric from the rebel leaders in Syria. According to Palestinian sources, on the 16th, Israeli warplanes bombed a house in Beit Lahiya, northern Gaza, killing five and injuring several others.
Ahead of the Federal Reserve’s upcoming meeting, the US dollar and Treasury yields declined, which supported gold prices. The US Dollar Index briefly rose to 107.16 before retreating, closing at 106.85, down approximately 0.08%. US Treasury yields also dropped slightly, with the 10-year yield ending the day at 4.3928%, down 0.39 basis points.
This week, attention will be on the Federal Reserve’s last interest rate decision of the year. The market widely expects a 25 basis point rate cut, but investors are closely watching for signs of a slower pace of rate cuts in 2025. Goldman Sachs predicts the Fed may signal a slower rate-cutting path and potentially skip a rate cut in January.
Nicky Shiels, Head of Metals Strategy at MKS PAMP, noted in her 2025 outlook that gold prices could range widely between $2500 and $3200 per ounce, depending on whether the Fed is ahead or behind the inflation curve. She anticipates the Fed will lag, leading to lower real rates and a weaker US dollar in the second half of the year.
Investors should focus on key economic data, such as the US November retail sales report, and stay alert to geopolitical developments.
Gold Technical Analysis:
Gold saw a slight rebound on Monday during choppy trading but faced resistance and ultimately retreated. Prices stabilized and rebounded at the 2650 level during the Asian and European sessions. In the afternoon, gold briefly broke above the 2664 resistance before falling back into a narrow range.
During the US session, gold continued to trend downward, closing near the 2650 level with a doji candlestick, indicating consolidation. Overall, gold experienced pressure at the 2664 level, continuing its short-term bearish adjustment.
Today’s Focus:
Today’s trading strategy should focus on shorting during rallies, with buying on dips as a secondary strategy.
- Key Resistance: 2665-2670
- Key Support: 2640-2635
Oil
On Monday, oil prices declined slightly due to concerns over insufficient demand growth. Investors remained cautious ahead of the Federal Reserve’s meeting, and crude oil prices retreated from multi-week highs.
Brent crude futures, which closed on Friday at their highest since November 22nd, ended Monday lower. WTI January futures fell by $0.58, or 0.81%, to $70.71 per barrel, while Brent February futures dropped by $0.58, or 0.78%, to $73.91 per barrel.
Last week, oil prices benefited from expectations that further sanctions on oil-producing countries like Russia and Iran would tighten supply. Additionally, speculation that lower interest rates in the US and Europe could stimulate demand provided support. Jim Ritterbusch from Ritterbusch and Associates noted, “We believe last week’s events have been priced in, and this week there are fewer factors to support oil prices.”
Concerns over global demand weighed on oil prices on Monday. The gloomy outlook for global demand also influenced OPEC+’s decision to maintain cautious production levels, postponing any production increases until at least April 2025.
Ahead of the Federal Reserve’s rate decision, market sentiment remained cautious, with traders engaged in profit-taking. The US dollar briefly reached a three-week high against other major currencies, which further pressured oil prices.
Additionally, investors are awaiting the US oil inventory report due this week. According to a Reuters survey, US crude and distillate inventories are expected to have declined, while gasoline inventories may have increased. The American Petroleum Institute (API) and the US Energy Information Administration (EIA) will release their respective reports on Tuesday and Wednesday.
Oil Technical Analysis:
Oil prices saw some pressure during Monday’s trading session. After dipping to around $70.4 during the Asian and European sessions, prices stabilized and rebounded.
During the US session, prices briefly tested the $71.2 level but faced resistance, leading to a retreat and a bearish candlestick formation on the daily chart. Overall, oil prices continue to fluctuate within a broad range, with resistance seen above the $71.4 level.
Today’s Focus:
Today’s trading strategy should favor buying on dips, with selling on rallies as a secondary approach.
- Key Resistance: 71.8-72.3
- Key Support: 69.5-69.0
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Disclaimer
This information contained in this blog is for general reference only and is not intended as investment advice, a recommendation, an offer, or an invitation to buy or sell any financial instruments. It does not consider any specific recipient’s investment objectives or financial situation. Past performance references are not reliable indicators of future performance. Doo Prime and its affiliates make no representations or warranties about the accuracy or completeness of this information and accept no liability for any losses or damages resulting from its use or from any investments made based on it.
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