Daily Market Analysis from Investizo.com

[Investizo]

Fundamental analysis of WTI

WTI crude oil prices are showing uncertainty, fluctuating around the 81.65 level, indicating market caution over future US inflation and employment data. According to the Energy Information Administration, there was the largest inventory decline in the last four weeks, and according to the American Petroleum Institute - the record since September 2016. The oil situation is characterized by conflicting economic signals. China's manufacturing data fell for the fifth consecutive month, demoralizing the economy and casting a shadow over the outlook for the world's second-largest economy. Nevertheless, traders still have some hope as they await the Federal Reserve's decision and therefore the US personal consumption expenditure data is likely to have an impact on oil demand dynamics. Geopolitical events further complicate the global oil situation. The recent coup in Gabon has further complicated OPEC's supply outlook, while economic growth in the US has been revised down to 2.1% and private sector wage growth is set to slow for the foreseeable future. Against this backdrop, industrial unrest in Australia is shrinking the LNG market, while a shift in geopolitical alliance is changing the dynamics of global oil trade, with India and China becoming the largest consumers of oil from Russia.




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[Investizo]

Fundamental analysis of XAU/USD

Gold prices (XAU/USD) are showing strength, trading at 1943.70, and have recently reached a high since early August, supported by a number of factors, including a weaker US Dollar on speculation over future Federal Reserve decisions. Over the past few days, the US Dollar Index has pared gains, consolidating at 104.05, amid mixed data on the US economy that suggests the Federal Reserve may maintain its current interest rate policy at its next meeting in September. In addition, a series of economic measures aimed at stimulating the economy of China, a global powerhouse and one of the largest consumers of gold, pushed the XAU/USD exchange rate higher. Notable measures include the government's efforts to revitalize the private sector, as well as significant adjustments such as the People's Bank of China's reduction in the required reserve ratio. In addition, some Chinese banks have adjusted RMB deposit rates. The disappointing performance of US Treasury yields over the past few weeks has contributed to gold prices, especially as the XAU/USD pair remains steady above key technical support levels. Despite the recent US dollar rally, this momentum appears to be waning, which indirectly boosts gold's appeal. However, the prospect of further rate hikes later this year could limit the dollar's decline and thus limit gold's upside.




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[Investizo]

Fundamental analysis of WTI

Benchmark US crude oil WTI - currently trading around 86.70. The recent strengthening of prices is due to a number of factors, both domestic and global. According to preliminary data from the American Petroleum Institute, U.S. oil inventories declined by 5.5 million barrels in the week ending September 1. This figure indicates supply constraints. Globally, major oil producers Saudi Arabia and Russia played a key role in influencing the trajectory of WTI. Both countries have decided to extend voluntary oil supply cuts until the end of 2023. Saudi Arabia is expected to cut production by 1 million bpd in the last quarter of 2023. On the other hand, Russia has pledged to cut production by 300,000 bpd. It is important to note that this reduction will be assessed on a monthly basis depending on changes in market conditions. Under the influence of these factors, oil futures contracts rose. With quotes trading near a nine-month high, market sentiment indicates that a short-term supply cut is imminent.





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[Investizo]

Fundamental analysis of WTI

US benchmark WTI crude oil - currently trading around 86.10. Oil prices are showing signs of a correction, especially as WTI crude has just bounced off an impressive 10-month high. Despite significant voluntary supply cuts from heavyweights such as Saudi Arabia and Russia, oil prices remained bearish. A strengthening US dollar and concerns over China's inconsistent economic recovery are the main potential factors dampening oil price gains. As the world's largest oil importer, China plays an important role in determining global oil demand. Interestingly, despite concerns about the state of the economy, China still reported a 30.9% increase in crude oil imports last month. However, the data for August does not look as optimistic, showing a decline in exports and imports. This is likely due to macroeconomic concerns related to weak domestic consumer spending.





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[Investizo]

Fundamental analysis of XAU/USD

Gold prices remained cautious on Tuesday, trading around 1919.70 as traders' attention focused on upcoming U.S. inflation data, which serves as an indicator for investors and future interest rate actions by the Federal Reserve, which hinted at further policy tightening. While the recent decline in the dollar has had a small impact on gold, making it a more attractive option for traders in other currencies, rising Treasury bond yields have limited that impact somewhat. The key to traders' strategy lies in the US consumer price index data released on Wednesday. It is considered by many to be an important indicator in determining the Fed's interest rate path in the coming months. Market rumors suggest that another interest rate hike is possible this year. The CME FedWatch tool gives a 93% probability that the Fed will maintain its current stance in September. However, between now and November, the probability of a rate hike is 41%. While the Fed is hesitant to significantly raise interest rates, it appears that the agency has yet to decide on its strategy. Gold's rise depends on a number of factors: a decrease in the Fed's aggressiveness, a drop in the dollar index and Treasury yields. However, until CPI data is released, the market is expected to remain inactive. CPI results equal to or higher than forecasts could reduce gold's upward momentum in the near term.





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[Investizo]

Fundamental analysis of XAU/USD

Gold is currently in a flurry of volatility, fluctuating under the influence of various macroeconomic indicators and general market sentiment. The gold price is fluctuating around the 1909.80 mark and is sensitive to a number of upcoming global economic indicators and decisions. One of the major factors affecting its price is the outlook for US inflation data, which plays an important role in shaping Federal Reserve policy.



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[Investizo]

Fundamental analysis of XAU/USD

The cost of gold continues its consistent decline and is trading at 1907.00. Interestingly, this pullback occurred against the backdrop of a weakening US dollar and 10-year Treasury bond yields, which usually support gold prices. The decline in gold prices is attributed to the latest US inflation data, which points to the possibility that the Federal Reserve will pause its interest rate adjustments next week. Digging deeper into these numbers, the Labor Department found that U.S. core inflation rose at an annualized rate at its lowest in nearly two years, hinting at the possibility that the Fed may pause interest rate hikes. In contrast, August marked the largest increase in U.S. consumer prices in 14 months, with a significant contribution from a sharp rise in gasoline prices. With such conflicting indicators, the market faces uncertainty about the Fed's interest rate direction in 2024, which has a significant impact on gold's volatility. Despite gold's historical appeal as a safe haven, the world's largest exchange-traded fund, the SPDR Gold Trust, saw its holdings fall 0.3%. This slowdown, reflecting falling demand, coincided with a strengthening US dollar, reinforced by inflation data. For investors trading in other currencies, the strong dollar drove up the price of gold. However, while the CPI data was largely in line with market forecasts, it suggested that the Federal Open Market Committee may maintain current levels, which would provide temporary support to prices. Given recent economic developments, market forecasts suggest that the Fed will leave interest rates unchanged at its next meeting. Rising interest rates traditionally increase the attractiveness of US Treasuries, making them preferable to underperforming assets such as gold. As a result, precious metals investors are shifting their concerns from inflation to the opportunity cost of owning gold in a rising interest rate environment. On the contrary, during Thursday's Asian session after the release of the U.S. Consumer Price Index data, gold showed a slight recovery and consolidated at 1910.00.





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[Investizo]

Fundamental analysis of WTI

WTI crude oil prices are trending higher and have reached their highest level since November 2022 at 90.57. This increase is due to a number of factors pointing to the prospect of higher oil prices in the near future. Chief among these factors is China's strong economic performance. Industrial production and retail sales figures for August were better than expected, indicating a consistent recovery from the COVID-19 pandemic. This strong economic performance complements China's record refinery throughput, which reached 64.69 million tons in August, up 20% year-on-year. This increase can be attributed to high tariffs imposed during the summer tourist season and favorable profit margins on exports to other Asian consumers. Major oil producing countries such as Russia and Saudi Arabia have decided to cut production. Such measures have raised fears of a looming supply shortage, especially in light of last month's OPEC+ resolution and the International Energy Agency's forecast of a market deficit throughout the fourth quarter as Saudi Arabia and Russia extend oil production cuts. Looking ahead, Saudi Arabia's oil production is expected to be at 1.3 million barrels per day during the period. Underpinning this sentiment, OPEC is optimistic about Chinese oil demand through 2023 and forecasts significant growth in global oil demand in 2023 and 2024.



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[Investizo]

Fundamental analysis of XAU/USD

Gold (XAU/USD) is trending higher and is trading at 1928.50. This rally has been boosted by December gold futures, which rose by 4.70 USD. This uptrend coincides with the weak sentiment in Asian equities, while precious metals are being strengthened by a range of global factors. The US Federal Reserve's next monetary policy meeting remains a top priority. Most expect the Fed to leave interest rates unchanged, but market speculation still points to the possibility of a 25 basis point rate hike in November or December. However, the resilience of the U.S. labor market, controlled inflation and rapid economic growth paint a picture in which the Fed could signal a soft landing for the economy. At the same time, the recent depreciation of the dollar based on recent US data has made gold more accessible to those trading in alternative currencies, making spot gold significantly more expensive each week.







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[Investizo]

Fundamental analysis of WTI

WTI crude oil prices continued their strong upward trend for the fourth consecutive day, trading at 91.20. This rise is likely due to a combination of factors: a significant decline in US shale oil production and continued supply cuts initiated by Saudi Arabia and Russia. US oil production is forecast to end October at 9.4 million bpd, the lowest since May 2023. The figure is boosted by promises from Saudi Arabia and Russia to extend production cuts of 1.3 million bpd through the end of 2023. There could be a shortage in the market. However, the future of the oil market has many conflicting opinions. The market has emphasized resilience and minimized the idea that oil demand is about to peak. This optimism is reflected in OPEC's forecast that demand will reach 102.1 million barrels per day this year, a more positive outlook than that of the International Energy Agency.







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