SPX fell 0.58% yesterday and has now declined for four consecutive sessions. SPX futures are up 0.43% this morning.Equities came under pressure on Thursday as oil prices surged, with WTI crude futures climbing above $100 a barrel. The rally was compounded by a sharp fall in Saudi supply. According to data the kingdom reported to OPEC, Saudi crude output fell to 6.238 million barrels per day in August, down 1.9 million bpd and its lowest level since 1990. Adding to regional supply fears, Houthi forces have advanced toward the Red Sea coast near the strategic Bab al-Mandeb Strait, with several analysts reporting the Iran-backed group has captured the port city of Mokha. Control of a second major port near the waterway would further tighten the militants’ grip on a chokepoint critical to global oil and shipping flows, deepening the maritime-security risk premium already building into crude prices.
Traders also digested August’s producer price index, a measure of wholesale inflation, which rose 0.4% month-on-month and 5.4% year-on-year.
Focus now shifts to Friday’s August consumer price index. Economists surveyed by Dow Jones expect a 0.4% monthly gain and a 3.4% annual rate. The reading carries added weight as an input into the Federal Reserve’s 16 September rate decision. According to the CME Group’s FedWatch tool, fed funds futures currently price a roughly 71% probability of a rate hike.
Technically, the SPX is at a critical juncture, trading right at the lower boundary of its ascending channel, which connects the lows of 6th August and 1st September with the highs of 28th August and 4th September. This level is pivotal: as long as price respects the channel floor, the broader uptrend remains technically intact, but a decisive break below it would mark a structural shift and tilt the SPX into a distinctly bearish tone. On the downside, immediate support lies at 7579, and a sustained break below may open the way towards the next support at 7527. On the upside, resistance lies at 7643.
Gold & Silver
Gold is trading near $4,350 after falling 1.8% in the previous session, with the metal heading for a third consecutive weekly decline. The latest US PPI data strengthened expectations of a Fed rate hike to 70% next week, lifting the dollar and Treasury yields and weighing on the non-yielding bullion. Investors are now awaiting today’s CPI report for further clues on the Fed’s policy path.
Inflation risks remain elevated as Brent and WTI crude prices stay above $100 a barrel amid escalating Middle East tensions and concerns over prolonged disruptions to energy supplies. A stronger-than-expected CPI reading could further boost rate-hike expectations, supporting the dollar and yields while putting additional pressure on gold. Conversely, softer inflation could ease these concerns and provide some relief to bullion.
A sustained recovery in gold may require a softer dollar and clearer signs that rate-hike expectations have peaked. Technically, gold is holding just above support around $4,320, reinforced by the 200-day EMA near $4,314. Resistance is seen at $4,410 (20-day EMA), followed by $4,445. A break below $4,313 could expose $4,230, while reclaiming $4,410 would improve the near-term outlook. Silver is trading above its support near $63.35 after falling by 5.4% yesterday. Resistance for the metal lies near $65.50, while a break below $63.30 may push it toward $60.
Gold prices in the UAE are as follows:
24K: AED 522.00
22K: AED 483.50
21K: AED 463.50
18K: AED 397.25
Crude Oil
Crude oil prices show strong upward momentum, with WTI jumping another 7.44% to cross the $100 mark and Brent surging 7.32% on Thursday. Both instruments are seeing some profit booking today during Friday’s Asian session, with WTI trading 2.96% lower and Brent trading 3.50% lower. Despite this, WTI is almost 10% up for the week while Brent is up 8.40%.
Geopolitical tensions escalated further as fighting between Yemen-based Houthi militants and Saudi-backed forces intensified, stoking fears of deeper energy supply disruptions in the Red Sea, which has become a vital alternative for global oil flows after hostilities escalated across the Middle East. Iran and the US seem to be settling in for a prolonged conflict, with little sign of a near-term truce or normalised Middle East energy flows. On top of that, Saudi Arabia said its oil output fell by 1.9 million barrels a day to 6.238 million a day last month, the lowest level since 1990, contributing to yesterday’s price jump. The GCC countries plan to meet Iranian diplomats on Monday in a bid to secure a deal to temporarily manage shipping through the Strait of Hormuz, providing key updates to oil markets next week.
Technically, oil prices have risen every day this week, with RSI on both WTI and Brent firmly in overbought territory, indicating strong short-term bullish momentum while also raising caution about booking profits. With WTI breaching the $100 mark, potential resistance could come from the 18th May highs near $109.32, while Brent could test the 19th May highs near $114.96.
The dollar index bounced 0.31% higher yesterday and closed above 99. It is now trading around 99.02, as higher oil prices and yields provide support, making today’s bias cautiously bullish.The dollar held gains and yields stayed higher after headline PPI data for August was mostly in line with estimates, while the monthly core measure was slightly below expectations. At the same time, the prior month’s data was revised higher. Investors are preparing for the latest US consumer price index report, which could cement bets on a Federal Reserve rate hike next week, which now sit around 70%. Treasury yields also jumped after the US Treasury Department’s first expanded buyback operation yielded lower-than-expected purchases. The 10-year yields hit the highest level since 2023, around 4.96%.
Meanwhile, the European Central Bank raised borrowing costs by 25 bps on Thursday in response to inflation caused by rising energy prices. The EUR/USD pair is stabilising around 1.160, close to the 50-day EMA. The USD/JPY pair is trading around 154.16 as the yen depreciated on an oil price spike; support remains near 153.00.
Technically, DXY faces key resistance at 99.30, followed by the 99.50-99.70 zone, where the 50- and 200-day EMAs converge. Conversely, support is likely around 98.56, followed by 98.40. Holding above 99 and a higher-than-expected CPI would support bullish sentiment. However, a core CPI in line with or lower than expectations would help reduce the rate-hike bets and create headwinds for the dollar. A break below 99 would weaken the bullish case.
