Oil dropped in today’s session as a rally driven by supply disruptions left gains looking overdone, and a US industry report pointed to a rise in stockpiles.
Brent fell 0.6% toward $108 a barrel, after rising 4% over the previous two sessions, while WTI was down 1%, near $105. The previous rally came following a shutdown of Saudi Arabia’s East-West pipeline and supply halt in Libya.
Now, Saudi Arabia is ramping up prompt spot sales of crude from outside the Strait of Hormuz. Saudi Aramco has sold about 20 million barrels to Asian refiners this week that can be picked up this month and next from just outside Hormuz. The buyers included Chinese state-owned and independent processors, and other importers in East Asia. Further, the industry-funded American Petroleum Institute reported that US crude inventories rose by 7.1 million barrels last week, while holdings of gasoline and distillates also expanded. Official figures are due for release later today.
Oil has still rallied sharply this year as the war between the US and Iran spread across the Middle East, while the conflict between Russia and Ukraine dragged on. Crude’s gains as well as steeper rises in product costs have contributed to a wave of global inflation, with a 90% probability that the Fed will raise interest rates later Wednesday to rein in the pace of price gains.
Despite the slight correction, both Brent and WTI are trading above the 9 and 21 EMA and look bullish. On the 4-hour chart, immediate resistance for WTI is at $107, followed by $109. Support is at the $101 level, followed by $98.8. Immediate support for Brent on the 4-hour chart is at $106, followed by $103, which is the 9th September breakout. On the upside, key levels are at $111. A break above this can push prices to $113.
Gold & Silver
Gold trades near $4,332, edging higher after finding support at $4,273 following its sharp decline from August’s high of $4,692. The metal remains under pressure from a resurgent US dollar and elevated Treasury yields, as markets await today’s Fed decision, due at 2:00pm ET (11:00pm Dubai time), and assess how many further hikes lie ahead. Gold buyers had pulled back sharply into the meeting on binary rate-decision risk, and the modest bounce now suggests some short-covering rather than a genuine trend reversal. If the Fed surprises markets by holding rates steady instead of delivering the widely priced hike, it would be a strongly bullish catalyst for gold and silver, likely triggering a sharp short-covering rally as rate-hike bets are unwound and the dollar comes under pressure. Cross-asset stress remains elevated too, with Brent’s one-year spread widening beyond $20, a signal that continues to keep macro traders on edge and inflation-hedge flows tilted toward energy rather than bullion. That said, the structural backdrop stays supportive over the medium term: ETF holdings have rebounded sharply from July’s lows back toward earlier-year levels, and central banks remain in steady accumulation mode per the latest World Gold Council data, both of which should help cap deeper downside once the current rate-hike overhang clears.
On the technical side, gold remains capped within a descending channel from the late-August high, with resistance at $4,352 (channel top) and a firmer barrier at $4,509. Support lies at $4,273, followed by $4,200. A sell-on-rise approach toward channel resistance is favoured while the structure holds, though a decisive break above $4,509 would challenge the bearish setup, and a no-hike surprise would likely trigger that break immediately.
Silver trades near $64.80, also rebounding off support near $62.00 within its own descending trendline from the early-September high. Resistance sits at $65.49, then the trendline itself near $66.00–67.00. A similar sell-on-rise bias is favoured while price stays capped below these levels, with a break above $66.00 needed to shift the outlook, a scenario that would also become far more likely on a surprise Fed hold.
US Markets
US equity markets were slightly weaker on Tuesday, with the SPX index closing 0.31% lower and the NDX index closing 0.71% lower. Markets remain relatively flat during the Asian session on Wednesday, with the SPX about 0.13% higher and the NDX 0.36% higher.
Equity markets remain under pressure from a macro perspective, burdened by rising inflationary pressures from surging oil prices amid the conflict in the Middle East. As a result, the US 10-year yield surged past the 5% mark on Tuesday, its highest level in almost two decades. Meanwhile, the Federal Open Market Committee (FOMC) meeting today will be the major focus this week, with markets expecting its first hike since 2023. The odds of a 25-bps rate hike at today’s meeting sit at 92.5%, according to the CME FedWatch Tool, while by year-end, two rate hikes have nearly 50% odds, adding to the pressure on risk assets. Another important market event occurred yesterday as the Clarity Act failed to garner enough votes to pass in the Senate, negatively affecting equities related to crypto.
From a technical standpoint, although the SPX index remains in a long-term bull flag on the daily chart, a break below $7625 from the highs of 2nd June indicates a short-term bearish market structure. Adding to that, RSI on the daily is also sloping downwards below the 50 level, indicating weakening momentum. Yesterday’s low around $7574 could provide near-term support; however, a break below could attract further selling. NDX index could find potential near-term support around the $28744 mark from the 100-day EMA and the lows of 14th September.
US Dollar Index Â
The dollar index is broadly flat at around 99.6, down 0.01% at the time of writing, as markets await the Federal Reserve’s policy decision on Wednesday. The Fed is widely expected to raise interest rates by 25 basis points, with markets pricing around a 92% probability of a hike. The decision would mark the first rate increase since 2023, with investors also looking for guidance on whether another hike could follow in October or December.
The FOMC’s new dot plot will therefore be a key focus, as it will provide updated projections for the federal funds rate from individual policymakers. However, the inflation backdrop does not currently point to an extended tightening cycle. The 10-year breakeven rate remains around 2.38%, suggesting that longer-term inflation expectations remain relatively well anchored and reducing the need for a prolonged sequence of rate hikes. Some of the recent pressure in the Treasury market may also reflect concerns around fiscal deficits and increased debt supply rather than a broad reassessment of inflation risks. A sustained rise in the breakeven rate would provide a stronger signal that inflation is becoming more persistent.
For the dollar, the immediate reaction will depend heavily on the Fed’s forward guidance. A hike accompanied by signals of further tightening could support the dollar, while a more cautious outlook or an unchanged policy rate could trigger renewed weakness. With much of the September hike already priced in, the dot plot and Powell’s guidance on the path beyond Wednesday are likely to be more important for the next directional move.
Technically, DXY is hanging onto recent gains in today’s trading session. The index needs a clean break above the 99.69 to 99.73 band, which capped price action last month, to see a move toward 100.06. The 200-day EMA at 99.54 remains the first-line support, with 99.40 serving as the next major structural floor. For the EUR/USD pair, it faces heavy resistance backed by a tight 50, 100, and 200-day EMA cluster ranging from 1.1566 to 1.1569. Remaining below this pivot keeps the downside open for a move toward 1.151, with 1.148 as the next key downside target.
