In the commodities market, recent movements have showcased divergent trends between gold and crude oil prices, prompting investors to reassess their trading strategies.
Crude Oil
Crude oil prices saw a decline of 1% to $82.33, attributed to diminishing concerns over supply disruptions amidst hopes for a Gaza ceasefire and reduced impact expectations from Hurricane Beryl. Despite spikes in recent weeks to levels not seen since late April, market sentiment shifted as managers anticipated increased demand for Brent coupled with decreased summer stockpiles. Notably, the US witnessed a significant 6% drop in drilling rig counts over a 10-week period, indicating a substantial shift in operational activities.
Technical Analysis
Examining the daily timeframe, MCX Crude Oil July futures have been observed trading within a symmetrical triangle pattern, encountering resistance at the upper band. The formation of a bearish candlestick pattern signals prevailing negative sentiments, supported by the RSI indicating a negative divergence, suggestive of underlying weakness. Resistance levels are currently identified at 6920 and 7052, while support levels are pegged at 6740 and 6660.
Intraday Trading Strategy
For intraday trading, market analysts recommend selling MCX Crude Oil July futures at Rs 6900, setting a stop loss at Rs 7052, with a target price of Rs 6740.
Gold Outlook
Conversely, gold prices exhibited resilience, bolstered by a weaker US Dollar and profit booking activities. Additionally, expectations of a Federal Reserve rate cut in September following soft US employment data further supported the precious metal’s appeal as a safe-haven asset amid political uncertainties in France and tensions in the Middle East. Earlier declines, attributed to China’s People’s Bank of China abstaining from gold purchases for the second consecutive month, were offset by broader geopolitical factors. Market focus now shifts to Federal Reserve Chair Powell’s forthcoming testimony and US CPI data later in the week, anticipated to provide further direction for gold prices.
By highlighting these contrasting movements in commodities, investors are advised to adopt nuanced strategies tailored to prevailing market dynamics, ensuring informed decision-making amidst evolving global economic variables.
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