Analytics

Oil prices have steadied on Wednesday, struggling to attract more decisive demand despite positive drivers. Brent crude dipped to local lows just above the $82 figure during the previous session before bouncing marginally. On Wednesday, the futures have settled in positive territory, but lack demand to regain the $83 mark even as the dollar keeps losing ground.

The greenback has been pressured since the start of the week as buyers stay on the sidelines ahead of a key US CPI report due later in the day. The USD failed to hold above the 105.00 figure to find support just above 104.80. The technical outlook has deteriorated further after a break below the 105.00 psychological support for the first time in more than a week.

Also, oil traders shrugged off the American Petroleum Institute report that showed U.S. crude oil inventories fell 3.104 million barrels in the week ended May 10, surpassing expectations of a 1.1-million-barrel drawdown. Gasoline inventories fell by nearly 1.3 million barrels and distillates rose by 673,000 barrels. U.S. government inventory data is due later today.

US CPI in focus

Stimulus measures from China failed to inspire oil bulls as well. Beijing plans to raise 138.39 billion in long-term special treasury bonds this week to raise funds to stimulate key sectors of its economy. As a reminder, China is the world's largest oil importer, so such news should be positive for the oil market.

However, buyers stay on the sidelines, in part due to a cautious tone in anticipation of a US CPI report. The report should give a clearer indication whether the Federal Reserve may cut interest rates later this year. Strong data could hurt oil prices through a potentially stronger dollar. On the other hand, should the release reveal a slower pace of CPI growth in April, Brent crude may see a bounce along with other risky assets.

The price of bitcoin bounced during the previous session after three days of losses. The BTCUSD pair saw weekly lows around $60,700 before attracting some demand that lifted the coin back above the $63,000 figure. On Friday, the digital currency holds steady, deciding on further direction.

Investors continue to buy bitcoin on dips, suggesting a wider bullish trend would remain intact, with the longer-term outlook staying positive. In the short-term, however, the largest cryptocurrency by market capitalization remains vulnerable, struggling to attract sustained demand.

The recent rally was due to soft US labor data that pulled down the dollar and reinforced bets on eventual interest rate cuts by the Fed this year. The number of US workers applying for unemployment benefits came in at 231,000 last week, up 22,000 from the week before. Against this backdrop, the US dollar came under pressure as risk sentiment improved further. The USD index slipped from a local high of 105.75 to fins support around 105.50.

Industry news weigh

Earlier in the week, bitcoin and other cryptocurrencies were pressured by fears of more regulatory action against crypto amid reports of more moves by the U.S. Securities and Exchange Commission against major players in crypto.

The negative sentiment in the cryptocurrency market was also fueled by the news that a peer-to-peer trading platform for privacy coin Monero has shuttered its services. On May 14, the platform will disable the trading of the privacy-focused crypto asset.

In the near term, BTCUSD needs to hold above the $63,000 figure in order to stay afloat and thus refrain from another pullback. On the upside, the immediate resistance now arrives at $63,500, followed by the $64,200 intermediate barrier on the way towards this week’s high of $65,600.

After failed bullish attempts earlier in the day, gold prices came under renewed selling pressure, losing ground for the second session in a row. Monday’s jump was capped by the $2,340 region, but the bearish momentum looks limited as well.

The XAUUSD pair has been oscillating mostly above the $2,300 zone these days, albeit struggles to attract mode decisive demand as the impetus has faded since peaking at fresh all-time highs just below the $2,450 region last month.

In a wider picture, the yellow metal stays within a bullish trend, trading in the green for the fourth month in a row. The bullion derives support from uncertainty surrounding the outlook for interest rates in the US and other countries.

Hawkish Fed caps gains

Of note, investor sentiment was undermined overnight by hawkish comments from a Fed official. In particular, Minneapolis Fed President Kashkari said that the central bank could potentially keep interest rates unchanged for the rest of the year. The statement sparked questions over the timing of potential interest rate cuts, adding to uncertainty in the financial markets and capping losses in the gold market.

Meanwhile, the US dollar retains bullish bias, extending its bounce from last week’s local lows seen around 104.50. The USD index is now back above 105.50, targeting the 106.00 figure. However, the upside potential looks limited at this stage due to subdued trading activity. Still, the greenback derived some support from the mentioned hawkish comments from Kashkari.

Against this backdrop, the XAUUSD pair is unlikely to stage any substantial bounce in the near term, with focus on the $2,300 zone. A decisive break below this level would open the way towards the $2,285 region that capped losses last week.

Oil prices saw solid losses earlier in the week to see mid-March lows around $83.03 during the previous session. Brent crude has bounced above the $84 figure since then, but refrains from a more decisive bounce so far. Of note, the oil price is on track for its biggest weekly losses in three months, shedding over 6% so far this week.

Oil was pressured by hopes for a deal to bring about a ceasefire in Gaza. A ceasefire, if agreed, would cut risks to oil supplies from the region. Besides, massive buildup in EIA inventories added to the decline. Crude oil inventories rose by 7.2 million barrels, contrary to the expected decrease of 1.1 million barrels. Gasoline inventories increased by 344,000 barrels, while a decrease of more than 1 million barrels was expected. US oil production remained unchanged at 13.1 million barrels per day. With rates at the highest in over two decades, concern about US oil demand persist, creating quite a limited upward potential for oil prices.

Sellers focus on $83 a barrel

Just a week ago, Brent crude was trading slightly below the $90 figure. Today, oil futures have settled just below $84 after a brief dip towards the $83 zone for the first time since mid-March. In the near term, oil needs to regain the $84 barrier on a daily (and weekly) closing basis in order to avoid another sell-off. On the downside, the nearest support now arrives at $83.30, followed by the $83 figure.

Of note, oil suffers losses despite dollar weakness. The greenback stays pressured on Friday after a two-day slide triggered by the Fed as the central bank’s tone was seen by traders as not as hawkish as expected.

Bitcoin keeps losing ground these days, with selling pressure intensifying after a failure to hold above the $64,000 figure. The BTCUSD pair has been plunging since Tuesday, trading around late-February lows as market players continue to take profit at this stage. The coin dipped to the $57,100 area, threatening the $57,000 figure, a break below which would open the way to fresh two-month lows.

The largest cryptocurrency by market capitalization failed to regain all-time highs last month as the ascent was capped by the $70,000 psychological level. Since then, the digital coin has been mostly pressured, staying in corrective mode as the halving failed to spark a rally.

Should the selling pressure persist in the near term, BTC may threaten the $55,000 region last seen more than two- months ago. In this scenario, the market focus will shift gradually to the $50,000 psychological support.

Further losses ahead

In the immediate term, bitcoin could be pressured by the Fed if the central bank strikes a hawkish tone during the meeting. Earlier in the week, the debut of bitcoin ETFs in Hong Kong did not generate the expected momentum.

On the other hand, the aggressive bearish pressure suggests that the BTC relief rally could be around the corner. If so, the price could stage a local rally after finding support. However, potential entry points could be lower than the current levels. In other words, the cryptocurrency could see more losses before attracting renewed demand.

In a wider picture, the technical outlook has been deteriorating since late March. The bullish trend has waned for the time being, but potential dip buying could prevent the coin from dramatic losses in the weeks to come.

Gold prices keep rebounding these days after an earlier brief slide to early-April lows around $2,300. The XAUUSD pair retains bullish bias on Friday, albeit looks set to finish the week lower after five weeks of gains in a row. After peaking at fresh all-time highs in the $2,450 area, the bullion has retreated partially, albeit the overall bullish trend remains intact.

The precious metal stays in positive territory ahead of the weekend even as investor sentiment has improved since yesterday. Overnight, Wall Street stocks finished lower after the data showed that economic growth in the US is slowing and inflationary pressures are persisting. The US GDP slowed to 1.6% in the first quarter, a much weaker pace than expected.

On the other hand, the annualized GDP chain price jumped from 1.6% up to 3.1%. Investors now project a longer wait for the first rate cut from the Federal Reserve, which is positive for gold.

XAUUSD could trim losses further

Now, investors are awaiting the release later in the day of the Fed's preferred gauge of inflation, US personal consumption expenditures index. Strong numbers could further dent expectations for how many cuts the bank will make this year. In this scenario, the yellow metal may add to intraday gains and thus trim weekly losses.

In the near term, the XAUUSD pair needs to hold above $2,340 in order to stay afloat and refrain from renewed selling pressure. On the upside, the nearest barrier arrives at $2,365, followed by the $2,390 region and the $2,400 figure last seen at the start of the week. On the flip side, the immediate support is now represented by the $2,340 region, followed by the mentioned $2,300 support zone that capped losses earlier in the week.

Oil prices rallied on Tuesday due to a weaker dollar in combination with some recovery in risk demand across the financial markets. Brent crude bounced from local lows seen below $86 at the start of the week to regain the $88 mark. On Wednesday, however, oil futures lack bullish extension as the priced are back in negative territory after rejection from the $88.75 area.

Fresh economic data out of the United States showed that manufacturing activity hit a four-month low of 49.9 in April to set in contraction territory. The release was seen by traders as support for the Federal Reserve cutting interest rates this year. Against this backdrop, the dollar slipped across the board, thus pushing oil prices higher as lower rates typically stimulate crude demand.

In industry news, the American Petroleum Institute reported crude inventories fell by 3.2 million barrels last week. If confirmed by the official report later today, that would be the first drop in five weeks. The API also reported a decline in overall gasoline levels, while oil stockpiles at the Cushing hub were seen contracting.

$88 in focus

In the near term, Brent crude needs to hold above the $88 figure in order to stay afloat instead of attracting another sell-off. A failure to finish above this level would confirm its bearishness even as the futures managed to come off the recent lows registered around $85.80 at the start of the week.

On the upside, the nearest significant barrier now arrives in the $88.80-489 zone. A decisive break above this region would pave the way to the $90 psychological level which, however, may deter buyers again. Brent needs some strong drivers to retarget this barrier at this stage.

Bitcoin managed to shrug off some of the recent weakness as buyers reemerged on a dip below the $60,000 mark that was briefly derailed earlier on Friday for the first time since late February. After a bounce, the BTCUSD pair has settled above $64,000, adding more than 5% on the day. At the low of $59,700, BTC was almost 17% below its all-time high.

Volatility in the cryptocurrency market remains elevated these days as investors get nervous in anticipation of a halving. The event is expected to take place on Friday or Saturday. The halving is cutting the current mining rate to 3.125 BTC from 6.25 BTC.

Bitcoin halving has historically boosted the price of the leading cryptocurrency. But this time, unpredictable macroeconomic factors regarding the upcoming halving need a cautious approach. Besides, the digital currency reached its peak a month before the halving event, which has never happened before.

Sellers could join the game

Due to the continuing outflow of money from bitcoin investments like ETFs, the BTCUSD pair could fall in the immediate aftermath of the halving. Anyway, the longer-term outlook for the digital coin remains upbeat.

In the near term, bitcoin could get back above the $65,000 figure if the buying pressure continues to build in anticipation of the halving event. By the way, the largest cryptocurrency by market capitalization saw a brief spike above this immediate upside barrier earlier in the day. The intermediate barrier on the way towards the $69,000 figure arrives in the $66,800 region. On the downside, a failure to hold above $60,000 could attract more selling interest within a possible market strategy “buy the rumor, sell the fact”.

Gold prices rallied to fresh all-time highs around $2,448 last week before retreating marginally amid overbought conditions. The XAUUSD pair looks relatively resilient in early European trading on Wednesday, with prices looking ready to extend the ascent in the near term. Still, the downside potential persists at this stage, as investors may take profit more aggressively after the spike.

On the weekly timeframes, the technical picture stays positive, with wider picture remaining upbeat after reaching fresh all-time highs. On the upside, the immediate significant target is now represented by the $2,415 zone, followed by $2,450. Downside risks are limited while above the $2,300 region. Should dollar demand reemerge in the near term, the bullion may threaten the $2,400 immediate support zone.

Strong dollar caps gold bulls

The US dollar extended gains to fresh October highs during the previous session before retreating marginally. After peaking around 106.50, the USD index has settled above 106.00, refraining from a deeper correction despite overbought conditions. The greenback has been rallying aggressively these days amid safe-haven flows and ebbing Fed rate cut expectations amid stubbornly high inflation. The dollar climbed to fresh more than five-month tops in the 106.52 area, preserving most of the gains so far.

In the near term, the XAUUSD pair could dip below the $2,400 mark should investors proceed to profit-taking. On the other hand, the overall outlook remains upbeat as the precious metal is likely to enjoy demand amid safe-haven flows that dominate global financial markets these days amid geopolitical tensions and waning Fed rate cut expectations. Should the incoming US economic data continue to surprise on the upside, the bullion may ease in the weeks to come.

Oil prices have been directionless this week, looking to finish unchanged. Brent crude has settled in a relatively tight trading range these days, struggling to attract sustained buying pressure amid worries about inflation. Strong US CPI numbers suggest the Federal Reserve is now expected to start reducing interest rates in September, not in June. For risky oil, this is a bearish sign that caps gains at this stage.

Brent crude briefly climbed above the $91 handle at the start of the week before retreating. Oil futures have settled around the $90 figure since then, trading in positive territory on Friday after yesterday’s dip. On the weekly timeframes, oil looks directionless after two weeks of solid gains. Still, the futures continue to hold near six-month highs registered earlier this month just below the $92 figure.

$90 in focus

In industry news, according to the US Energy Information Administration’s latest weekly report, US commercial crude oil inventories increased by 5.8 million barrels from the week ending March 29 compared with a build of 3.2 million barrels for the previous week. A day before, the American Petroleum Institute estimated a build of over 3 million barrels in crude oil stocks.

Earlier, oil was pressure by reports that Hamas and Israel will finally agree on a ceasefire. However, as hopes of a ceasefire in the Middle East began to dampen, Brent managed to shrugg of some of the selling pressure.

In the near term, oil futures need to hold above the $90 psychological level that represents the immediate support at this stage. A failure to stay above this handle may bring back more sellers into the game. On the upside, the nearest barrier is represented by the $90.90-$90.95 zone, followed by this week’s highs in the $91.10 area.