Oil Slips to $70, Gold Struggles to Confirm $3000

Key Events to Watch:

• Trump signals a potential Russia-Ukraine peace deal, easing oil hedging risks.
• U.S. Core CPI hits a 10-month high, while CPI m/m and y/y reach 17-month and 7-month highs, respectively.
• Fed signals no rush for rate cuts, weighing on oil, while gold rises on economic uncertainty.
• OPEC maintains oil demand forecasts for 2025 and 2026, unchanged from previous assessments.

Trump Pushes for a Peace Deal

Oil is aligning with its broader downtrend as 2025 progresses, with short-lived upside risks fading. Reports of a Russia-Ukraine peace deal have eased energy disruption fears, though uncertainty remains over Middle Eastern tensions.

Gold Exhausts Bullish Momentum

Although a Russia-Ukraine peace deal may emerge after a three-year conflict, the Middle East crisis between Israel and Gaza remains unresolved. Trump's proposal to assume control over Gaza and involve neighboring countries like Jordan and Egypt in resettling Palestinians has been met with firm rejection.

Jordan’s King Abdullah reiterated on X: "This is the unified Arab position. Rebuilding Gaza without displacing the Palestinians." Trump’s controversial stance has increased geopolitical uncertainty, further supporting gold’s safe-haven appeal amid rising inflation, trade war risks, and currency depreciation concerns.

Fed Seeks Inflation Confirmation Through PCE Data

Following the Fed’s decision to delay rate cuts, U.S. inflation data exceeded expectations, prompting the Fed to focus on additional inflation metrics, particularly U.S. PCE, before making further policy decisions:

• Core CPI surged to 10-month highs (0.4% from 0.2%)
• CPI m/m hit a 17-month peak (0.5% from 0.4%)
• CPI y/y reached a 7-month high, touching the 3% mark

Despite Trump’s pressure on the Fed to cut rates, oil markets are pricing in a slower demand outlook, sending prices back to key support at $70, near a four-year price average. 

Technical Analysis: Quantifying Uncertainties

Oil Forecast: 3-Day Time Frame – Log Scale

Source: Tradingview

Following a bullish engulfing pattern, oil’s upside momentum was short-lived, as prices fell back toward the $70 zone with Russia-Ukraine supply risks fading.

• Key support: $70–$69.50, with further downside at $66, $64, and $60 if overproduction risks and economic slowdowns persist.
• Final bearish forecast below 60: $55 and $49 • Upside breakout: A move above short-term resistance at $76 and a decisive close above $78, breaking the two-year downtrend, could pave the way for rallies towards $82, $86, and $90

Gold Forecast: 3-Day Time Frame – Log Scale

Source: Tradingview

Gold’s recent $2,940 high remains un-sustained, with RSI nearing overbought levels last seen in November 2024, where Gold retreated nearly 100-points, keeping bearish forecasts intact.

• Key support levels: $2,820 and $2,790, with a deeper drop toward $2,730 if bearish momentum strengthens
• Upside scenario: A breakout above $2,940 is required to confirm a bullish extension toward $3,000 and $3,050
• Short-term outlook: Despite a brief pullback after CPI data, investors continue to flock to gold as a hedge against inflation and trade war risks

Written by Razan Hilal, CMT

Follow on X: @Rh_waves

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