Article by: ETO Markets
Global commodity markets face heightened uncertainty as central banks pivot toward potential rate cuts and geopolitical tensions escalate. President-elect Trump's proposed 100% tariffs on BRICS nations, intensifying Middle East conflicts, and the US Dollar strength above 108.00 create a complex risk environment. Meanwhile, China's economic challenges and persistent inflation concerns shape market sentiment, with the CME FedWatch Tool indicating a 97% probability of a December rate cut.
The crude oil market confronts structural challenges as OPEC+ production cuts compete with rising non-OPEC+ supply, forecast to exceed demand growth by 0.4 million bpd in 2025. Chinese demand recovery remains tentative while US strategic reserve releases and Iran's potential market return add to supply uncertainties. Technical consolidation around $… reflects this fundamental ambiguity.
Gold maintains momentum with a 27% year-to-date gain, driven by central bank purchases and safe-haven demand amid geopolitical tensions. The metal finds additional support from moderating US PCE inflation data and anticipated Fed rate cuts, though dollar strength near two-year highs poses immediate headwinds. Market focus shifts to potential policy shifts under the incoming Trump administration.
Gold's market dynamics are primarily driven by anticipated Federal Reserve rate cuts and heightened geopolitical tensions. The metal has demonstrated remarkable strength, posting a 27% gain year-to-date, its best performance since 2010. Recent US PCE inflation data has bolstered expectations for monetary policy easing in 2025, with increased market confidence in potential rate cuts. However, the US Dollar Index's position above 108.00 presents a notable headwind for the dollar-denominated metal. Political uncertainty surrounding the incoming Trump administration, particularly regarding proposed trade policies including 100% tariffs on BRICS nations, adds complexity to the outlook. Ongoing geopolitical tensions, including developments in the Russia-Ukraine conflict and Middle East situations, continue to support safe-haven demand. Large-scale central bank purchases and institutional interest remain key drivers, though the year-end trading conditions may introduce additional volatility.
The technical landscape for gold reveals a complex interplay of support and resistance levels that warrant careful attention. Currently, the most significant resistance zone is positioned between $…-$…, where both the 20-day and 55-day Moving Averages converge, creating a strong technical barrier. The core resistance level sits at $…, which aligns with the 50.8% Fibonacci retracement level and has historically acted as a pivotal price point. On the support side, immediate attention falls to $…, the recent daily low where buying interest has emerged, followed by crucial support at $… at the 100-day Moving Average. The price action between these levels shows consolidation, with the current price at $… testing the immediate support zone. The Relative Strength Index hovering around … suggests neutral momentum, though the overall structure indicates a slightly bearish bias below the key moving average resistance zone.
Crude oil markets face complex supply-demand dynamics as 2024 draws to a close. OPEC+'s decision to extend production cuts through 2026 underscores persistent concerns about demand sustainability, while the International Energy Agency forecasts non-OPEC+ supply growth of 1.5 million barrels per day outpacing demand growth of 1.1 million bpd in 2025. This supply-demand imbalance creates bearish pressure, though geopolitical tensions, particularly regarding Russian oil sanctions and Middle East conflicts, provide price support. Chinese economic measures and US economic resilience offer potential demand catalysts, but market sentiment remains cautious. Supply chain vulnerabilities and structural underinvestment in oil research and development present long-term challenges. Year-end trading conditions and reduced liquidity may introduce additional price volatility, while the global economic outlook, especially concerning Chinese demand and US policy shifts, continues to influence market direction.
WTI crude oil's technical structure presents a nuanced picture with clear support and resistance levels. The primary resistance zone lies at $…, coinciding with recent swing highs and the 20 days upper Bollinger band at $…. A secondary resistance level exists at $…, marked by the 100-day Simple Moving Average. Support is now established at the psychological $… level near the holiday season, with a crucial support zone at $…, which has maintained price stability over the past quarter. The current price action exhibits a potential bull flag formation, with the 20-day Moving Average at $… providing dynamic support. The Relative Strength Index reading of … indicates neutral momentum, while the Moving Average Convergence Divergence shows early signs of positive divergence. The Bollinger Bands width suggests compressed volatility, potentially setting up for a directional move. Price consolidation between these levels suggests accumulation, though the broader downtrend from September highs remains influential.
