On Monday, dragged down by a stronger dollar and rising U.S. Treasury yields, gold prices fell in quiet holiday-season trading. Oil prices remained under pressure due to the dollar hovering near a two-year high.
Gold Market Overview
On Monday, the gold market was under pressure as the U.S. Dollar Index climbed near a two-year high, coupled with rising U.S. Treasury yields. Gold briefly touched an intraday low of $2,608.08 per ounce before closing with a 0.27% decline at $2,613.70 per ounce.
Economic Data & Market Sentiment
- U.S. Economic Data: November durable goods orders showed robust growth, supported by strong machinery demand, while new home sales rebounded after hurricane disruptions. These indicators point to sustained economic resilience heading into year-end.
- Market Impacts: A stronger dollar, buoyed by economic data, and rising bond yields weighed on non-yielding assets like gold.
Marc Chandler, Chief Market Strategist at Bannockburn Global Forex, noted, “Until market sentiment turns more dovish than the Fed, the dollar is unlikely to weaken significantly.” Despite headwinds, gold remains on track for a 27% year-to-date gain, its best performance since 2010.
Dollar & Bond Yields
The U.S. Dollar Index (DXY) climbed 0.43% to 108.084, holding near a two-year high. Meanwhile, the 10-year Treasury yield rose 7.3 basis points to close at 4.597%, its highest since May 30. Both factors applied additional pressure on gold prices.
What to Watch Today
This week features limited economic data due to the holiday season. Key market closures:
- Christmas Eve: Markets, including bonds and gold, close early on December 24.
- Christmas Day: Full market holiday on December 25.
Traders will focus on price action within key technical levels as liquidity remains thin.
Technical Analysis of Gold
On Monday, gold exhibited a wide range of movements. Prices tested resistance near $2,633 before pulling back sharply, breaking support at $2,617 to touch an intraday low of $2,608. The daily candlestick showed a hanging man pattern, indicating strong resistance above $2,630. Despite the pullback, gold remains in a broader consolidation phase.
Today’s Focus & Strategy
- Trading Strategy: Focus on short positions during rebounds, with long positions on pullbacks as a secondary approach.
- Key Resistance: 2605-2610
- Key Support: 2575-2570
Oil Market Overview
On Monday, crude oil prices experienced declines, pressured by the U.S. dollar hovering near a two-year high and concerns over global supply. WTI February crude futures fell $0.22, or 0.31%, to settle at $69.24 per barrel. Brent February futures dropped $0.31, or 0.42%, to $72.63 per barrel.
Economic Data & Market Sentiment
- Stronger Dollar: The U.S. Dollar Index remained near its two-year high, eroding crude oil’s appeal in global markets.
- Economic Concerns: Despite signs of easing inflation in the U.S., broader worries about global economic growth and oil demand persisted. Last week, WTI crude dropped 2.6%, while Brent crude declined 2.1%.
UBS analyst Giovanni Staunovo commented, “As the dollar strengthens, oil prices have surrendered earlier gains. Supply-side issues and global growth concerns continue to weigh on the market.”
Additionally, Macquarie analysts project Brent crude’s average price may decrease to $70.50 per barrel in 2025, compared to $79.64 per barrel in 2024, reflecting ongoing caution in the energy sector.
Supply Dynamics
U.S. crude production remains robust. According to Baker Hughes, the number of operational oil and gas rigs rose to 483 as of December 20, marking the highest level since September. This indicates steady production growth, although concerns about the broader supply-demand balance remain unresolved.
Technical Analysis of Oil
Oil prices experienced a “sell-off and rebound” pattern in Monday’s choppy trading. During Asian and European sessions, prices were capped below $69.9, showing weak oscillations before falling in the U.S. session to around $68.5. Overnight, prices rebounded above $69, closing with a small bullish candlestick. The $68 level has demonstrated effective support, and in the short term, oil prices are likely to continue oscillating within a range as they consolidate.
Today’s Focus & Strategy
- Recommended Strategy: Focus on buying at pullbacks, with selling on rebounds as a secondary approach.
- Key Resistance: $70.5–$71.0
- Key Support: $68.4–$67.9
Risk Disclosure:
Securities, Futures, CFDs and other financial products involve high risks due to the fluctuation in the value and prices of the underlying financial instruments. Due to the adverse and unpredictable market movements, large losses exceeding your initial investment could incur within a short period of time.
Please make sure you fully understand the risks of trading with the respective financial instrument before engaging in any transactions with us. You should seek independent professional advice if you do not understand the risks explained herein.
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.
