On Tuesday, gold prices climbed over 1% intraday as the People’s Bank of China increased its gold reserves for the second consecutive month. However, strong US economic data pushed the US dollar and Treasury yields higher, narrowing gold’s gains. Gold settled 0.48% higher at $2648.19 per ounce. Oil prices also rebounded, closing nearly 1% higher, supported by expectations of tighter supplies from Russia and Iran and a decline in US API crude inventories.
Gold Market Overview
Gold prices rose on Tuesday, boosted by China’s central bank increasing its gold reserves for the second consecutive month. However, strong US economic data during the US session lifted the dollar and Treasury yields, trimming gold’s intraday gains.
- Close: $2648.19 per ounce (+0.48%)
- High: Over 1% intraday gain
Market Drivers
- China’s Gold Reserve Increase:
Official data showed China’s gold reserves rose to 73.29 million ounces by the end of December, up from 72.96 million ounces in November. This marks the second consecutive month of increases following a six-month pause in additions. - Geopolitical Uncertainty:
Gold also found support from uncertainty surrounding President-elect Trump’s policy direction. During a press conference at Mar-a-Lago, Trump suggested he might not rule out using “military or economic coercion” to gain control over strategic assets like the Panama Canal and Greenland, citing US economic security needs. - Strong US Economic Data:
- November job openings rose to a six-month high, beating all analyst estimates, indicating strength in the labor market.
- December ISM Non-Manufacturing PMI increased to 54.1, up from November’s 52.1 and above expectations of 53.3, intensifying concerns about persistently high inflation.
Upcoming Data
Today’s key events include:
- US ADP Employment Data (December)
- Minutes from the Federal Reserve’s December Monetary Policy Meeting
- Updates on Trump’s policy plans and geopolitical developments.
Technical Analysis of Gold
Gold faced resistance at $2664, retreating to close near $2648 after consolidating around the $2633 support level. The intraday action reflected a broad range of $2633–$2664. While the price action suggests ongoing consolidation, the daily chart indicates that gold remains within a “two-steps-forward, one-step-back” upward trajectory.
Today’s Focus & Strategy
- Trading Strategy: Favor short positions on rebounds, with long positions on pullbacks as a secondary approach.
- Resistance: $2665–$2670
- Support: $2635–$2630
Crude Oil Market Overview
Oil prices climbed nearly 1% on Tuesday, driven by multiple factors, including expectations of tightening supplies from Russia and Iran and a decline in US API crude inventories.
- WTI February Futures: +$0.69 (+0.94%) to $74.25 per barrel.
- Brent March Futures: +$0.75 (+0.98%) to $77.05 per barrel.
Market Drivers
- Supply Concerns:
- Western sanctions have raised concerns about reduced oil supply from Russia and Iran.
- Maria Agustina Patti, a financial market strategist at Exness, noted that supply constraints from these nations have supported oil prices.
- Additionally, Saudi Arabia raised its oil prices for Asian buyers for the first time in three months, signaling stronger demand for Middle Eastern crude.
- API Inventory Report:
- US API crude inventories fell by 4.02 million barrels for the week ending January 3, far exceeding the expected decline of 250,000 barrels.
- However, gasoline inventories rose by 7.33 million barrels, and distillate inventories increased by 3.2 million barrels.
- OPEC Production Decline:
- According to a Reuters survey, OPEC’s oil output declined in December after two months of increases.
- This drop was attributed to maintenance-related reductions in UAE production and a decrease in Iranian output, which offset gains from Nigeria and other OPEC members.
Upcoming Data
Investors will monitor:
- US EIA Crude Inventory Data (December 30)
- Developments in Trump’s policy plans and geopolitical tensions.
Technical Analysis of Crude Oil
Crude oil prices extended their rebound on Tuesday, with WTI finding support at $73.1 before climbing above $74 during the US session. Brent crude similarly showed strength, hovering near $77.
- Daily Chart: WTI formed a bullish candlestick with a “dip-and-recover” pattern, confirming support at the 5-day moving average.
Today’s Focus & Strategy
- Trading Strategy: Favor long positions on pullbacks, with short positions on rebounds as secondary.
- Resistance: $75.8–$76.3
- Support: $73.7–$73.2
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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.
The above strategies reflect only the analysts’ opinions and are for reference only. They should not be used or considered as the basis for any trading decisions or as an invitation to engage in any transaction. Doo Prime does not guarantee the accuracy or completeness of this report and assumes no responsibility for any losses resulting from the use of this report. Do not rely on this report to replace your independent judgment. The market is risky, and investments should be made with caution.
