WTI recovers on supply-side disruptions while gold and silver continue to gradually slide
Outlook on WTI, gold and silver ahead of speeches by several US Federal Reserve committee members.
WTI tries to hold onto Monday’s gains
On Monday WTI recovered from its $69.39 one-week low as supply-side disruptions and the resumption of US oil reserve purchases propped up prices.
The large number of wildfires in Canada represent a growing threat of supply disruptions, as does the third seizure in a month of a foreign-flagged tanker in the Persian Gulf by Iran, while the US replenishes its depleted Strategic Petroleum Reserve, with deliveries planned for August.
Despite this, WTI has so far not managed to break through its April-to-May downtrend line at $71.92. For a bullish reversal to gain traction, a rise and daily chart close above the next higher $73.82 high, made last week, would need to ensue.
While this hasn’t happened, the risk of further downside pressure manifesting itself on global recession fears and lacklustre growth in top importing country China leading to reduced future demand, remains in play.
A drop through last week’s low at $69.39 could push the March and early May lows at $64.37 to $63.77 back to the fore.
Gold remains under pressure
The price of gold continues to gradually come off its early May multi-year high and is about to retest its breached April triangle resistance line, now because of inverse polarity a support line at $1,998 per troy ounce.
It has acted as support over the past week but if it were to be slid through, the April triangle support line at $1,985 may be revisited.
With this week’s economic calendar looking sparse, traders will look to guidance from a host of Federal Reserve speakers such as Bostic, Kashkari, Barkin and Cook on Tuesday which may provide some volatility, the most important of which will be on Friday when Fed chair Jerome Powell is scheduled to speak.
Meanwhile resistance between $2,022 to $2,032, Monday’s high and the 5 April peak, is expected to cap any minor advance.
Silver drops to six-week low
The price of silver has taken a hit amid a rising US dollar and relatively weak China industrial production growth with the precious metal sliding to the 55-day simple moving average (SMA) at $23.72.
Below it lies the $23.50 zone around which the price of silver oscillated from December to early February with the late January low at $22.76 representing the lowest level of this sideways trading range.
In case of a currently unexpected recovery to above Monday’s $24.21 high being seen, the February high and late April low at $24.50 to $24.63 are expected to offer good resistance.
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