US Markets
US equity markets rose to fresh record highs on Tuesday, with the SPX up 0.63%, breaching the $7,800 mark and the NDX up 0.54% by the close. Wednesday’s Asian session is seeing a slight pullback in both indices, with SPX trading near $7830, down 0.08% and NDX trading near $31,215, down 0.13%.
The S&P 500 has risen for 4 straight sessions now, indicative of its renewed buying momentum. Chipmakers were the leaders on Tuesday, with Marvell Technologies gaining 5.8% on better revenue guidance and AMD rising 2.8% after Citi hiked price targets, citing CPU demand. The AI infrastructure trade also extended beyond semiconductor stocks to electricity suppliers. Constellation Energy jumped about 12%, Talen Energy gained 12%, while Vistra rose 11%. Google had a 20-year agreement with Constellation that supports $4.3 billion of investment to add 890 megawatts by upgrading existing nuclear reactors. Moreover, oil prices were stable on Tuesday and are now in their 4th week of decline, supporting the recent equity rally. Investors are awaiting the minutes of the September FOMC meeting, which would shed light on how policymakers are thinking about economic conditions.
Technically, the SPX index remains firmly above key moving averages on the daily timeframe, suggesting strong demand. The index has broken and closed above the previous record high of $7821 from the highs of 13th August. A retest of this level could be a possibility; however, if held, it suggests buyers are positioning for the next leg of buying. The NDX index is seeing similar strength and has risen in 6 consecutive daily sessions. The RSI is near the 68 level, nearly in overbought territory on the daily timeframe, suggesting slight caution before further buying momentum returns.
U.S. Dollar Index
The US Dollar Index fell 0.25% in the previous session but has regained momentum, trading 0.27% higher at 102.11 in early trading. The recovery is supported by elevated US Treasury yields and renewed safe-haven demand, with persistent inflation concerns keeping pressure on the US bond market. Higher yields continue to strengthen the dollar’s relative return advantage and provide a floor for the DXY.
Markets are now focused on the September FOMC minutes for further signals on the Fed’s policy outlook. While weaker labour-market data has reduced expectations for an October rate hike, markets still price around an 85% probability of a rate hike by year-end. Persistent inflation risks could therefore keep US yields elevated and limit downside pressure on the dollar. Meanwhile, heightened Middle East tensions are supporting safe-haven demand for the dollar. Increased attacks around the Red Sea and Strait of Hormuz have raised concerns over oil supply disruptions, pushing crude prices back to $91.61 from yesterday’s low of $88.74. Higher oil prices could further reinforce inflation concerns and support elevated US yields.
Technically, the DXY has immediate support at 101.75, the previous session’s low, followed by the 9-day EMA at 101.665. On the upside, immediate resistance is seen at 102.285, the previous session’s high, followed by 102.53, the current week’s high. For EUR/USD, currently trading at 1.1216, down 0.38%, immediate support is at 1.1161, while resistance is seen at 1.1276.
Crude Oil
Oil is showing signs of a near-term rebound amid renewed Iranian attacks on vessels. UK Maritime Trade Operations recorded nine attacks in the waterway MTD, already half the total reported across the Strait of Hormuz and Persian Gulf combined in September. Consequently, WTI gained 0.6% yesterday and formed a strong hammer candlestick, signaling potential for further near-term upside. It is currently up 0.21% at $91.65. A trend-based Fibonacci extension drawn from the late-July high to the early-August low and then the mid-September peak places 100% support at $87.03. Yesterday’s low of $88.74 also aligns closely with both the daily 100-EMA and the August 20 high, reinforcing $87.03–$88.74 as a key support zone. On the 4-hour chart, another trend-based Fibonacci extension, drawn from the late-September low to the October 1 high and then yesterday’s low, places 100% resistance at $93.85. With the 4-hour 100-EMA just above at $94.36, $94 represents a potential first target, followed by resistance around $96. Brent also formed a strong hammer yesterday, with the session low of $100.12 aligning with an upward-sloping trendline and the daily 50-EMA. It is currently up 0.11% at around $104.40, with scope to rebound toward $107.72. This marks the 38.2% level on a trend-based Fibonacci retracement drawn from the late-August low to the mid-September high and then the late-September low.
Beyond the near-term rebound, however, the fundamental backdrop shows supply recovering. Middle East oil flows have recovered to between 80% and 90% of pre-conflict levels, while roughly 12 million barrels per day of crude passed through Hormuz over the past seven to 10 days. Saudi Arabia is also pumping 5.8 million barrels per day through its cross-country pipeline to the Red Sea after the route was shut last month following drone attacks from Iraq. Further supply could come from emergency reserves, with the IEA due to discuss the G7’s proposed release of up to 100 million barrels of crude and diesel. That said, overall, the technical setup favours a near-term bounce.
Gold & Silver
Precious metals continue to face headwinds from a stronger dollar and higher yields. Gold is trading below $4,150, while silver is below $61. Oil prices reversed from yesterday’s low amid geopolitical volatility, raising inflation concerns. Today’s bias turns mildly bearish.
The moves in the dollar and Treasury yields are creating a choppy market for gold. The 10-year yield is holding above 5.30%, and its negative correlation with gold has increased recently due to fiscal concerns. Earlier in September, it fell below -0.5 but now stands at -0.61. This caps any upside in gold, especially with September CPI due next week. On a relief note, ETF flows have been positive despite the price action, even as precious metals fell in late September. Exchange-traded funds added 81,000 troy ounces of gold to their holdings in the last trading session, bringing this year’s net purchases to 2.19 million ounces, according to data compiled by Bloomberg. This was the third straight day of growth. Additionally, central bank buying provides support, with August adding 39 tonnes, up from July.
Technically, $4,100-$4,120 is a crucial support level for gold as it was recovered after a failed breakdown in the previous session. This level also sees confluence with an ascending trendline from June lows. Secondary support sits around $4,050. On the upside, resistance is likely around $4,180, near yesterday’s high, followed by the $4,220-$4,250 zone. This zone has confluence from the VWAP anchored to the September Fed meeting and the 20-day SMA. Target short entries on failure and pullback from $4,180, with $4,120 as the initial support and TP level.
For Silver, the $60-$60.2 level acts as crucial support, while $61.8-$62 acts as initial resistance, followed by $63 (anchored VWAP from the September Fed decision). Target short entries on failure and pullback from $61.8, with $60.2 as the initial support and TP level.
