Gold, Oil Under Pressure as Fed Flags Inflation Risk and Trade War Intensifies – Century Financial
- Gold
Gold prices dropped to their lowest point in over three weeks on Monday amid a broader market sell-off. Gold fell more than 2.46% on Friday as investors sold off bullion to cover their losses from a broader market meltdown as an intensifying trade war sparked global recession concerns. During market volatility, the price drop in the traditionally safe haven asset has led to speculation that investors might be selling off gold to realize profits, potentially covering losses or margin calls on other trades. China’s retaliatory measures against U.S. tariffs, including additional levies and export restrictions, have further fuelled market uncertainty. Adding to investor concerns, Federal Reserve Chairman Jerome Powell said tariffs increased the risk of higher inflation and slower growth, highlighting the difficult path ahead for policymakers at the U.S. central bank. On the daily chart, gold is trading below the 9-day SMA at $3,025 and could see support at the psychological level of $3,000 and potential resistance could be seen at $3,055.
Gold prices in the UAE today are as follows:
24 Carat – AED 365.75
22 Carat – AED 338.50
21 Carat – AED 324.75
18 Carat – AED 278.25
- Crude Oil
Oil prices dropped significantly on Monday due to escalating trade tensions between the US and China, due to rising concerns about reduced crude demand and a potential recession. Brent fell by 4.88% to $62.38 a barrel, while US WTI declined by 5.10% to below the $60 mark. Oil prices may continue to face pressure unless both the US and China reach an agreement about tariffs. The recent tariffs war is heightening concerns about inflation, slower economic growth, and possible stagflation, all of which are contributing to the downward pressure on oil prices. In addition to these factors, the decision by OPEC and its allies to boost oil output could further impact prices. The planned increase in production levels, especially considering the substantial cutbacks in recent years, is seen as a significant challenge for oil prices moving forward. Geopolitically, tensions remain high as Iran rejected direct nuclear talks with the US, while Russia claimed territorial gains in Ukraine. These developments add further uncertainty to the already volatile oil market. On the chart, Brent is trading below the 9-day SMA and could be seen as resistance at $64.34 and support at $60.67.WTI is also trading below the 9-day and can see resistance at $59.72 and support at $58.01.
- U.S. Markets
The Nasdaq 100 plunged into bear market last week while the DJIA entered correction territory. The S&P 500 plummeted 6% on Friday alone – its largest decline since 2020 that slashed. Despite a stronger-than-expected NFP report showing 228,000 jobs added in March, only 14 constituents of the S&P 500 posted gains that day. Strong hiring was observed in the services sector – particularly healthcare, retail, and transportation – which indicates the labour market is still holding up. However, Powell’s latest remarks at an annual conference struck a cautious tone and acknowledged the risk of stagflation. Although further selloff is likely, most investors are likely to capitalize on the current pullback by accumulating stocks with strong fundamentals on dips. The first quarter earnings season is set to begin, and analysts expect S&P 500 profits to increase 7% YoY – down from an earlier projection of 11.7% growth. The S&P 500 is down 4.68% at $4,826 – with support at $4,790 and $4,685. It could encounter resistance at $5,042.
- U.S. Dollar
On Friday, the dollar rose by nearly 1% after a stronger-than-expected Nonfarm Payrolls report. The US added 228,000 jobs in March, much higher than the forecast of 135,000, even surpassing the most optimistic predictions. The dollar’s rise was also supported by comments from Fed Chairman Powell, who highlighted a “wait-and-see” approach while warning about the likely inflation risks from tariffs. However, in early trading today, the dollar has fallen by 0.7%. Technically, it’s trading below the 9-day SMA, with immediate resistance at $102.92 and key support at $101.05.
Last Updated on 6 days by PR News Desk
