The SPX Index is down about 0.60% today and is currently trading at $7,610.
From a fundamental standpoint, Sam Altman added his support to the idea of “pacing” AI development, so that cutting-edge models don’t outrun the ability of humans to maintain control. Altman said this shift in focus to safety will come at a cost, but it’ll be worth it to maintain confidence that US companies are developing increasingly capable artificial intelligence responsibly. This has led to a dip in AI stocks worldwide. Furthermore, pressure has increased after the planned meeting between Iran and several Gulf nations to create a temporary shipping lane through the Strait of Hormuz was postponed.
From a technical standpoint, the SPX Index is trading slightly below its bull flag support at $7,613. The recovery of this level would trigger a bullish stance. Looking into the day ahead, the SPX Index is retesting the breakdown of the $7,613 level, supporting an intraday bearish stance with targets reaching $7,530.
Gold & Silver
Gold is down about 0.73% today and is currently trading at $4,315.
From a fundamental standpoint, the planned meeting between Iran and several Gulf nations on creating a temporary shipping lane through the Strait of Hormuz has been postponed. This has led to an increase in oil prices. Further pressures emerge amid the shutdown of the Saudi East-West Pipeline. The Middle East crisis has delivered an inflationary jolt to the global economy, with prices of crude, natural gas, and petroleum products, including diesel, rallying. Even before the assault on the East-West conduit, oil output from the kingdom had been under pressure. Riyadh recently reported to the OPEC cartel that its crude production last month sank to the lowest level since 1990. After US data showed the pace of price gains marched higher in August, the Federal Reserve is widely expected to raise rates this week, a move that would negatively affect gold prices.
From a technical standpoint, though, gold is forming a triangle formation on the 4-Hour chart; it must be noted that the metal is facing technical weakness at the $4,310-$4,325 support zone. Looking ahead, a breakdown of the $4,310 level could trigger a bearish move toward $4,225. On the flip side, a bounce from this level could support a bullish stance.
Gold prices in the UAE are as follows:
24K: AED 521.75
22K: AED 483.25
21K: AED 463.25
Crude Oil
Oil prices have been on an upward spiral after Saudi Arabia said late on Friday that it had halted the East-West pipeline, which is responsible for about 7 million barrels per day of production and played a key role in easing the oil supply disruption triggered by the Iran war. This was done as a precaution after drones damaged the pipeline the previous day, with no indication of how severe the damage is or how long it will remain closed. A crucial meeting between Iran and several Gulf nations scheduled for Monday on creating a temporary shipping lane through Hormuz was postponed, amid a rapid military advance by Iranian-backed Houthi militants in Yemen. Iran said the meeting was postponed at the request of regional countries, and negotiations on details such as fees ships may be charged are set to continue between Iran and Oman. As per some experts, if the pipeline closure is prolonged, it could lead to output cuts by the Kingdom, suggesting a short-term bullish market structure.
Technically, WTI prices have risen more than 9% for two consecutive weeks, indicating their strong bullish momentum, with RSI on both WTI and Brent hovering near the overbought territory, raising slight caution about short-term profit booking. 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.
Last week, we saw that the dollar rose by 0.47%
Fundamentally, the dollar looks potentially bullish as rate-hike expectations rise. On Friday we saw the 10-year Treasury reach 5% before retreating to 4.97%. Both the 10-year and two-year Treasuries are trading in oversold territory. This gives us added confirmation that a rate hike on 16th September is imminent. According to the CME FedWatch tool, the probability of a rate hike is 86.5%, up from 59.4% last week. A rate hike will potentially be bullish for the dollar. The dollar’s gain also reflects the US position as the world’s biggest oil producer, with West Texas crude rising 2.5% to exceed $102 per barrel on news that a planned Monday meeting on creating a temporary shipping lane through the Strait of Hormuz had been postponed.
The euro fell for a third straight day as stocks fell on artificial-intelligence concerns and oil prices remained elevated on supply woes. EUR/USD dropped 0.5% to 1.1536, its lowest since Aug. 14; options sentiment is slightly more bearish, as one-week risk reversals sit at 12 bps in favor of the greenback.
On a technical level, on the weekly chart, the dollar is trading in a range-bound fashion. It is trading between 98.62 and 99.84. The dollar faces resistance at 99.75, as it coincides with the 100-day SMA. On a break above this, the dollar may face resistance at 100. On the downside, we see a confluence of the 9-, 20-, and 200-day SMAs at 99.15, which may prove to be a strong support. On a break below this point, we may see the next support at 99. Until the FOMC meeting, the dollar may continue trading in this range-bound manner.
