Daily Commodity Analysis – Oil Dips, Gold Wavers as Fed’s Rate Decision Looms
20 Sep 2023
In the lead-up to the U.S. Federal Reserve’s pivotal interest rate decision, WTI Crude Oil witnessed a $1 drop, raising uncertainty about energy demand amidst concerns about peak rates. Despite favorable indicators like a drawdown in U.S. oil inventories, oil markets remained cautious. Similarly, in the world of Gold, prices dipped as inflation worries loomed large, reflecting a cautious sentiment among traders awaiting the Fed’s rate decision that could steer the precious metal’s course.
WTI Crude Oil:
Oil prices dropped $1 ahead of the Fed’s rate decision.
In anticipation of the U.S. Federal Reserve’s interest rate decision on Wednesday, oil prices dropped by about $1. Investors were unsure of when peak rates would be reached and how much of an impact, they would have on energy demand.
Despite a larger-than-anticipated drawdown in US oil inventories and sluggish US shale production, which pointed to a limited supply of fuel for the remainder of 2023, prices plummeted. According to Edward Moya, senior market analyst at data and analytics company OANDA, “the oil rally is taking a little break as every trader awaits a pivotal Fed decision that might tip the scales of whether the U.S. economy has a soft or hard landing.”
Investors will evaluate the prospects for economic growth and gasoline consumption based on a number of central bank interest rate decisions this week.
- MA 5: 90.18 | negative Crossover | Bearish
- MA 20: 89.76 | negative Crossover | Bearish
- MA 50: 87.52 | positive Crossover | Bullish
- MA 5: 90.58 | negative Crossover | Bearish
- MA 20: 90.02 | negative Crossover | Bearish
- MA 50: 87.35 | positive Crossover | Bullish
RSI (Relative Strength Index): 50.03 | Buy Zone | Bullish
Stochastic Oscillator: 0.00 | Sell Zone | Negative
Resistance And Support Levels:
- R1: 91.78 | R2: 94.98
- S1: 89.20 | S2: 86.08
Overall Sentiment: Bearish | Market Direction: Sell
Trade Suggestion: Stop Sell: 88.31 | Take Profit: 86.08 | Stop Loss: 89.91
Gold prices are declining amid hawkish Fed concerns.
A recent surge in inflation has stoked concerns about a possible hawkish outcome, which led traders to steer clear of large wagers ahead of the Federal Reserve’s interest rate decision later in the day, which led to a modest decline in gold prices on Wednesday.
Gold prices have recently received some bids due to the increased uncertainty before the Fed meeting, helping to keep prices well above $1,900 an ounce. Larger gains, though, were constrained by a higher dollar, which was trading at six-month highs.
However, the Fed’s decision on interest rates will be crucial in deciding the future direction of the gold price.
Technical Overview :
- MA 5: 1930.00 | Negative Crossover | Bearish
- MA 20: 1924.81 | Positive Crossover | Bullish
- MA 50: 1923.08 | Positive Crossover | Bullish
- MA 5: 1931.24 | Negative Crossover | Bearish
- MA 20: 1920.49 | Positive Crossover | Bullish
- MA 50: 1926.57 | Positive Crossover | Bullish
RSI (Relative Strength Index): 56.26 | Buy Zone | Positive
Stochastic Oscillator: 74.37| Buy Zone | Negative
Resistance And Support Levels:
- R1: 1936.00 | R2: 1954.67
- S1: 1921.64| S2: 1900.10
Overall Sentiment: Bullish | Market Direction: Buy
Trade Suggestion: Stop Buy: 1942.10 | Take Profit: 1954.67 | Stop Loss: 1934.20.
Elsewhere In the Commodity Market.
On Wednesday, copper prices among industrial metals decreased slightly, extending declines into a fourth straight session under pressure from the dollar and concern over China, a significant importer.
On Wednesday, silver draws dip buyers and halts the overnight decline from a two-week high.
Gold down (0.08%) at 1929.99, Silver up (0.23%) at 23.24, Palladium up (1.47%) at 23.23, Platinum up (0.11%) at 944.23, Brent Crude Oil down (1.24%) at 93.19, WTI Crude Oil down (1.25%) at 89.33 as of writing time.
Key Economic Events & Data Release Today:
(USD) Fed Interest Rate Decision Forecast 5.50%, Previous 5.50% at 23:30.
(USD) FOMC Economic Projections at 23:30.
(USD) FOMC Statement at 23:30
(USD) Crude Oil Inventories Forecast –2.200M, Previous 3.954M at 20:00.