Markets Rise as Oil Prices Ease and AI Optimism Holds Strong – Comments from Century Financial

The S&P 500 is set for its eighth straight week of gains, helped by lower oil prices, strong economic data, and ongoing optimism about AI-related growth. Recent data showed weaker U.S. jobless claims, highlighting a strong labor market. Manufacturing activity also hit a four-year high in May, as businesses built up inventories amid supply shortage concerns and higher costs from the Iran conflict. These trends suggest the Fed will likely stay cautious about cutting rates because inflation risks remain.

Technology and AI-related stocks continue to lead the market but investors are becoming more selective. NVIDIA dropped 1.8% even after reporting strong earnings and announcing an $80 billion buyback, showing that markets are paying closer attention to valuations. Investors will closely watch next week’s earnings from companies including Costco Wholesale, MongoDB, Marvell Technology, Zscaler, and Abercrombie & Fitch for further insight into consumer demand and AI spending trends.

From a technical perspective, the index closed marginally above the 9 EMA and still remains above the 21 EMA. The 5-period RSI is around 62, indicating the overall uptrend is still intact and the index is bullish. On the 4-hour chart, Immediate support is at $7,394 (20-day EMA), followed by $7,340. Immediate resistance is at yesterday’s session high of $7,465, followed by the $7,500.

Crude Oil

WTI crude oil witnessed a highly volatile session yesterday, closing 1.17% lower. However, prices are currently trading around $101.52 flat at the time of writing, in early Asian trade, holding firmly near a key technical support zone that could act as a strong base for a near-term rebound.

Oil prices are finding support from rising geopolitical tensions in the Middle East. Recent reports suggest that Iran’s Supreme Leader has ordered the country’s enriched uranium reserves to remain inside Iran complicating ongoing peace negotiations as dismantling Tehran’s nuclear program remains a key demand from the U.S. Additionally, Iran is reportedly working with Oman on a framework for a permanent toll system that would strengthen its control over maritime traffic through the Strait of Hormuz, one of the world’s most critical oil shipping routes. However, U.S. President Donald Trump rejected the proposal, stating that the waterway should remain open, free, and without toll charges. These developments have increased concerns over potential supply disruptions, which could continue to support bullish momentum in crude oil prices.

Technically, WTI crude oil found support at its 50-Day SMA in the previous session and rebounded from those levels. Currently trading around $101.50, WTI is holding near a key horizontal support zone that aligns with multiple previous touch points of 11 May, 16 & 18 March, and 23 April. This zone could act as a strong base for a potential rebound in oil prices. Immediate support is placed at the previous session’s low of $99.20. A break below this level could turn bearish for crude oil in the near term. However, as long as prices remain above this support the likelihood of a rebound remains intact. The next major support is seen near last week’s low at $97.05. On the upside, immediate resistance is placed at the 9-Day SMA around $103.50, followed by the previous session’s high near $106.52. Brent is currently trading at $106.56 mark. Immediate support and resistance are seen at last session lows and highs at $103.67 and $110.89 respectively.

Gold & Silver

Gold and silver prices remain pressured amid elevated oil prices and treasury yields, with the DXY near a 6-week high. In today’s session, gold is down 0.68%, trending lower towards $4,500, whereas silver is down 1.11% near $75. The intraday bias remains moderately bearish.

Mixed signals over a potential US-Iran peace deal have kept the greenback’s reserve currency status intact, undermining demand for precious metals. The 10-day correlation between gold and DXY is significantly negative (-0.78). It hasn’t shown any major weakening, which suggests this level is likely to hold unless treasury yields and oil prices correct materially. Market participants are pricing in over a 60% chance that the US central bank will raise borrowing costs by 25 bps at the December meeting.

From a technical perspective, gold is holding below the $4,570-$4,600 zone, weighed down by the 50-period EMA on the 4-hour chart and the 38.2% Fib retracement. Along with this, it is trading within a broader descending channel (drawn from the April highs) and below the 200-period EMA (4-hour chart). This keeps the near-term bias capped despite some consolidation. The top of this downward channel also converges with the 200-period EMA near $4,657 to form a dense overhead supply area. On the flip side, support is likely around $4,450, followed by the bottom of the descending channel near $4,365 (close to the 200-day EMA). For silver, resistance is likely near $78 (20 and 50-day EMA), whereas support is likely near $72 (38.2% Fib retracement).

U.S. Dollar Index

The dollar index went up by 0.08% yesterday.

Thursday’s PMI data delivered a clear and significant divergence story. Stronger-than-expected US flash Manufacturing PMI data reinforced expectations that the Federal Reserve may maintain a cautious stance on interest rate cuts, extending the narrative of US economic resilience that has underpinned the greenback all week. The Citi US Economic Surprise index is climbing toward a fresh yearly high, underscoring that the US economy still has underlying momentum. A peace deal may remove one source of geopolitical stress, but it would not erase the growth and rate differentials supporting the dollar.