[Morning Market] Inflation falls more than expected, increasing the likelihood of rate cuts.

Gold Perspective:

Data released by the U.S. Department of Labor yesterday (July 11) indicated that due to a significant drop in gasoline prices,Huitong Finance Network the inflation data for June in the U.S. slowed more than expected. The unadjusted CPI for June was recorded at 3.0%, below the market expectation of 3.1% and the lowest level since June last year; the monthly rate was -0.1%, marking the first negative value since May 2020.

The data suggests that after rising at the beginning of the year, inflation has resumed its downward trend. Broader economic activities are slowing, and the unemployment rate has been rising for three consecutive months, opening the door for the Federal Reserve to consider rate cuts later this year. According to the CME "FedWatch" tool, the probability of a 25-basis point rate cut in September has risen to 84.6% following the data release.

Technical Analysis: Gold surged straight up yesterday, nearing its historical high with very strong bullish momentum. In the short term, recent uptrends are likely to be followed by short-term corrections, so it would be wise to wait for a pullback before moving in. Focus on the key level of $2403 during the day.

Oil Perspective:

In its latest monthly report, the International Energy Agency (IEA) predicted that global oil demand growth in the second quarter will drop to its lowest in 12 months (710,000 barrels/day). The IEA maintained its growth forecast for 2024 at 970,000 barrels/day and downgraded its growth demand forecast for 2025 by 50,000 barrels/day to 980,000 barrels/day.

Meanwhile, OPEC remains optimistic, expecting global oil demand to increase by 2.25 million barrels/day in 2024 and by 1.85 million barrels/day in 2025. OPEC has also revised the global economic growth outlook for 2024 from 2.8% to 2.9%, attributing the increase to resilient economic growth and a strong summer travel season driving fuel consumption.

Technical Analysis: Looking from the low point in early June, the bullish trajectory for oil remains unchanged, with a high probability of continuing upward. A deep correction began last week, and this week it tested the support level at $81, which was effective. The key level of $82.50 has been broken, suggesting an upward target toward the $84 range.

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