On Wednesday, a wave of relief washed over financial markets as inflation data came in lower than expected, alleviating concerns over rising prices in the United States and bolstering expectations of potential interest rate cuts by the Federal Reserve later this yearInvestors noted a slight weakening of the US dollar index, which dipped below the key 109 mark at one point, but quickly regained ground to close down merely 0.07% at 109.10. Simultaneously, US Treasury yields saw a significant drop, with the benchmark 10-year yield settling at 4.657%, down from previous levels, while yields on the more sensitive 2-year notes ended at 4.266%. This economic backdrop saw major US stock indices rally, with the Dow Jones Industrial Average rising by 1.65%, the S&P 500 climbing 1.83%, and the Nasdaq Composite soaring by an impressive 2.45%.

Recent core inflation figures from the US have created a favorable environment for gold investors

The core Consumer Price Index (CPI), which excludes the more volatile food and energy prices, increased by 3.2% year-over-year, falling short of the market expectation of 3.3%. The release of this data helped ease worries about inflationary pressures, igniting renewed hopes that the Federal Reserve may opt for a more accommodative monetary policyBefore the inflation data was unveiled, market participants were anticipating a mere 31 basis points of rate cuts by year-end, which shifted to a broader expectation of around 40 basis points following the announcement, contributing to a weakened dollar and enhancing gold's allure for investors holding other currencies.

Moreover, the decline in US Treasury yields has supported gold prices by diminishing the opportunity cost of holding non-yielding assets like goldAs the 10-year Treasury yield dipped, the attractiveness of gold increased further, aided by the falling dollar index

• Over 360 Billion! Public Funds Enter the OTC Market
• U.S. CPI Boosts Gold
• Will 2025 See a New Turning Point in Housing Prices?
• 16.5 trillion in capital fleeing Vietnam?
• Fed Rate Cut Expectations Revive

This dynamic made gold increasingly appealing for international investors, as the dollar's value declined by 0.1%, amplifying gold's appeal in the global market.

From a geopolitical standpoint, the announcement of a ceasefire agreement between Israel and Hamas brokered by the United States and Qatar has had a relatively neutral impact on the gold marketWhile the ceasefire may reduce tensions in the Middle East, investors remain attentive to how this agreement will be implemented and its long-term implications for regional stability.

Looking at global economic prospects, the Organization of the Petroleum Exporting Countries (OPEC) projects that the world economy will maintain a robust growth rate of 3.2% by the year 2026, supported by stable growth across major economiesThis forward-looking perspective indicates continued expansion in the global economy, providing foundational support for long-term demand in the gold market.

In summary, a multitude of factors are currently propelling the gold market, with investors keenly observing the lower support levels in the 4-hour timeframe

Following any potential corrections and stabilization, many are inclined to take positions to go long on gold.

Shifting focus to crude oil, a substantial reduction in US crude oil inventories has been a major catalyst for the recent surge in oil pricesAccording to reports from the US Energy Information Administration (EIA), last week's crude oil inventories fell to their lowest levels since 2022, decreasing by 2 million barrels to 412.7 million barrelsThis decline significantly exceeded the market expectations of a 992,000-barrel decrease, highlighting a tightening supply-demand dynamic within the US oil marketThe inventory drop was largely attributed to increased exports and decreased imports, particularly as pre-sanction booking volumes surgedEIA data indicated a drop of 1.3 million barrels per day in US crude net imports to 2.05 million barrels per day, while weekly crude exports surged by 1 million barrels per day to 4.08 million barrels per day.

Additionally, the latest round of sanctions imposed by the US on Russia has raised concerns about potential disruptions in the global oil supply chain

The International Energy Agency (IEA) highlighted in its monthly oil market report that US sanctions could significantly impact Russian oil supplies and distributionThis uncertainty has further stoked market fears around supply interruptions, driving oil prices higher.

From a geopolitical perspective, the ceasefire agreement between Israel and Hamas has somewhat restrained the increases in oil pricesWhile this agreement may contribute to easing tensions in the Middle East, market participants are closely monitoring its implementation and the long-term effects on regional stability.

In terms of global economic growth, there appears to be a divergence in OPEC and IEA forecasts concerning future oil demandOPEC has revised down its oil demand growth outlook in its monthly report, signaling weakening momentum from Asian economies previously seen as key growth drivers

Conversely, the IEA has raised its global oil demand growth forecast, indicating that demand in the fourth quarter is anticipated to surpass prior expectationsThese discrepancies in projections reflect the broader uncertainty surrounding future economic growth and oil demand.

Furthermore, the US consumer price index for December saw a month-on-month increase of 0.4%, surpassing market predictionsThis uptick suggests rising energy costs, potentially providing support for crude oil demandA robust rally in US stock markets has also enhanced optimism regarding the recovery in oil demand, with the three major stock indices posting their most significant one-day percentage gains in over two months.

In conclusion, the crude oil market finds itself buoyed by a confluence of factors, including inventory reductions, uncertainties from sanctions, expectations of global economic growth, and prevailing geopolitical circumstances.