WTI on track for fourth monthly decline, gold and copper their first this year
Outlook on WTI crude oil, gold and copper as US dollar strengthens amid hawkish Fed.
WTI on track for fourth monthly decline
WTI crude oil prices are likely to drop for a fourth consecutive month as surging US stockpiles and the prospect of further monetary tightening on the back of strong economic data outweigh demand expectations from China, the world’s largest importer, and production cuts from Russia.
While Monday’s high at $76.85 per barrel isn’t overcome, a downside bias is expected to remain in play with last week’s low at $73.85 remaining in sight. Below it and the late November low at $73.67 the December-to-February uptrend line at $73.34, together with the January and February lows at $72.64 to $72.50, should offer support ahead of the $70.25 December low.
Minor resistance above Monday’s $76.85 high can be spotted along the 55-day simple moving average (SMA) at $77.86 and further up at the 19 January low at $78.45.
Gold remains under pressure as greenback continues to strengthen
Gold continues to slide as the US dollar advances and as the inverse correlation between the two keeps rising with the psychological $1,800 mark about to be reached due to expectations of further monetary tightening being seen by the Fed.
The next lower November peak at $1,786 may soon also be in focus ahead of the 200-day SMA at $1,776 which may offer support. For now the precious metal remains within its early to mid-December highs at $1,824 to $1,810 which acts as a support zone but may soon give way.
Minor resistance above the mid-February low at $1,819 sits at $1,846 to $1,847, the 20 and 22 February highs, and can also be seen along the 55-day SMA at $1,860 as well as at the 3 February low at $1,862.
While no bullish reversal takes the price of the precious metal above these levels, the downtrend remains firmly in place.
Copper approaches $8,593 to $8,629 support area
As the US dollar strengthens on the back of a hawkish Fed, the price of copper declines and is fast approaching its November and December highs at $8,629 to $8,593 per ton, having last week slipped through and closed below its November-to-February uptrend line at $8,880.
Together with the 55-day SMA at $8,853, the breached uptrend line at $8,880 is likely to now act as a resistance line ahead of minor psychological resistance around the $9,000 mark. Further minor resistance can be spotted at the 8 February high at $9,064.
From a medium-term perspective, provided that last week’s high at $9,212 isn’t bettered, a slide back towards the 200-day SMA and the January low at $8,301 to $8,189 may be on the cards.
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