Gold: Oil spike weighs on prices – OCBC

OCBC strategists Sim Moh Siong and Christopher Wong highlight that Gold has dropped toward 4000 as renewed US–Iran tensions pushed Oil sharply higher, reviving inflation concerns and lifting US yields. Fed Governor Waller’s hawkish comments add pressure, making the near-term environment challenging if Oil and yields stay elevated. However, a pullback in Oil or softer United States (US) Consumer Price Index (CPI) could help Gold stabilise, with support at 3940/60 and resistance near 4110.

Gold pressured by oil and yields

"Gold fell close to 4000 as renewed US-Iran tensions pushed oil prices sharply higher. The oil spike had revived inflation concerns, lifted Treasury yields and reinforced Fed tightening expectations."

"To add, Fed’s Waller added to the hawkish rhetoric, saying that FOMC will need to consider tightening monetary policy in the near term if inflation gets another hot reading this week."

"This puts focus on US CPI data and on Fed Chair Warsh’s testimony to House Financial Services committee tonight. Near term environment for gold remains challenging if oil prices remain elevated and yields continue to rise."

"Conversely, a pullback in oil or a softer US CPI could help gold stabilise."

"Gold last seen at 4004 levels. Mild bullish momentum on daily chart shows signs of fading while RSI fell. Risks skewed to the downside for now. Support at 3940/60 levels (recent low in Jun). Resistance at 4110 (21 DMA)."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)