Gold has resumed its downtrend in today’s session, after edging up slightly higher in yesterday’s session as Trump announced a halt on the Iran attacks. It is trading at $4,050 and is down almost 0.6%. Inflation concerns still persist, as WTI oil stands at $81.60, nearly 15% higher than last month, overshadowing the short-term optimism from Trump’s announcements. Market participants will closely track the FOMC meeting this Wednesday as renewed tensions in the Middle East have triggered a rise in energy costs. According to CME FedWatch, the probability of the current rates being maintained is at 64%. However, markets are still pricing a 90% probability of a rate hike by the end of the year. Expectations of a rate hike typically increase pressure on non-yielding metals, making them less attractive. The yellow metal is down by almost 25% from the highs created in January. History shows it takes a while for bullion to recover from peaks. A quick look at its prior tops from 2020, 2011 and 2008 shows that performance remained dismal 12 months later, averaging -23%.
Technically, the metal is trading at $4,050 and has mostly stayed within a range over the past month, between $3,945 and $4,160. The daily 14-period RSI has also not crossed the 50 level since April, indicating a lack of positive momentum. It also respects a long-term downward trendline connecting the highs of $5420, $4774, and $4130, respectively. A break below its recent support at $4022 may lead to testing the lows of $3,945. Conversely, only a decisive breakout and close above $ 4,160 would suggest increasing bullish momentum.
Similarly, Silver is also down by 1.5%, trading at $57.48 and has remained range-bound over the past month between $55.60 and $63.25. A break below its recent support at $57.14 may lead to testing the range low at $55.6. Conversely, a breakout and close above the $63.25 level would indicate bullish momentum picking up in the metal.
Oil extended a steep decline after President Donald Trump said that the US and Iran were engaged in talks to try to end the Middle East conflict, with the two sides continuing to hold off on attacks.
Global benchmark Brent fell below $88 a barrel after tumbling by 8.7% on Monday, the most in more than three months, while West Texas Intermediate was near $81.
President Trump said he decided to pause strikes to give negotiations another chance, according to Axios. He also said there was a “good chance” talks would make progress. However, there is a lot of speculation about whether the USA is running low on interceptors. Should this be the case, peace talks may be a distant reality.
On a technical level, looking at the Brent daily chart, we see some support. An inverted saucer pattern formed between 15th June and 24th July, after which a breakout took place. On the daily chart, the candlestick is near the neckline at 83.32. Moreover, this coincides with the 0.5 level on the Fibonacci retracement, drawn from the low of 1st July and the high of 22nd July. We may see a lot of push and pull from buyers at this level, hence it acts as support. A break below $83.32 may open the door to the next support at $80, a psychological benchmark that coincides with the 0.618 level on the Fibonacci retracement. On the upside, resistance lies at $85, a level tested a few times in July.
Technically, WTI shares the same sensitivities as Brent. WTI fell by 9.73% yesterday. WTI too followed the inverted saucer pattern, with the breakout/neckline at $78.79, and is currently testing that support on the daily chart. A break below this level might be bearish for WTI, with its next support at $78. On the upside, potential resistance lies at $85.
U.S. stock futures traded lower on Tuesday, with S&P 500 futures down 0.35%, as investors turned cautious ahead of a pivotal week featuring major technology earnings, a Federal Reserve policy decision and key U.S. economic data. In the previous session, the S&P 500 managed to post a modest gain as easing Middle East tensions and lower oil prices helped calm inflation concerns.
Markets are now entering what could be the most important week of the earnings season. Results from Amazon, Apple, Meta Platforms and Microsoft will be closely watched for evidence that heavy AI-related capital expenditure is translating into stronger earnings growth. While investors broadly expect the Federal Reserve to leave interest rates unchanged on Wednesday, markets will be looking for greater clarity on the policy outlook amid elevated inflation risks. Attention will also be on U.S. consumer confidence data, while Coca-Cola, UPS, Corning and Boeing are set to report before the opening bell.
The semiconductor sector remains under pressure as concerns over the AI investment cycle continue to build. ASML shares fell after reports that a Chinese state-backed company has begun mass-producing domestic deep ultraviolet (DUV) lithography machines, raising questions about ASML’s long-term competitive advantage. The weakness spilled over to the broader chip sector, with the Philadelphia Semiconductor Index (SOX) extending recent losses. Chipmakers Samsung Electronics and SK Hynix, who are both key customers of ASML were down in today’s trade. Investors are increasingly questioning whether the massive capital expenditure plans of AI hyperscalers can generate sufficient long-term returns, particularly as cheaper Chinese AI models gain traction and enterprises become more cost-conscious. A continued shift toward lower-cost AI models could slow demand for advanced computing infrastructure, weighing on sentiment across the semiconductor supply chain.
This week’s earnings from the largest technology companies are likely to be the key catalyst in determining whether confidence in the AI trade can recover or whether concerns over capital spending and future returns continue to pressure the sector.
Technically, SPX is sitting at a key inflection point. Bulls need to reclaim the 50-day EMA at 7,429, which is currently acting as the first major resistance and sits near today’s open. As long as price holds the 7,395-7,400 support zone, buyers retain a chance to stabilize and squeeze higher. A break above 7,469 would be the first sign of strength, opening the door for a retest of 7,495, yesterday’s high. On the flip side, 7,395-7,400 is the line in the sand. A break below that area and the support from the rising trendline gives way, likely triggering a downside rotation toward 7,313. For now, SPX remains trapped between key support and resistance, with a break of either side likely setting up the next directional move.
US Dollar Index
The Dollar Index is unchanged today and is currently trading at 101.526.
From a fundamental standpoint, market participants seem focused on the FOMC meeting this week, as evidenced by the calm pre-FOMC price action. Current expectations are that the Fed is highly expected to leave interest rates unchanged in the range of 3.50%-3.75%. The CME FedWatch tool shows a 62% chance that the Fed will maintain the status quo. However, Warsh’s statement afterwards is expected to garner attention. The CME FedWatch tool shows that the odds of the Fed delivering an interest rate hike in the next policy meeting in September are 80.8%.
From a technical standpoint, on the daily chart, DXY broke the trendline resistance formed by connecting the highs of 101.80 on 24th June, 101.59 on 1st July, and 101.32 on 14th July on 23rd July, supporting a bullish stance in the near term. On an intraday basis, on the hourly chart, DXY seems to be emitting price acceptance at the 101.54 resistance mark; a break above this level supports a bullish stance targeting 101.7. On the flip side, a break below the 101.44 price mark can target 101.20.
