Gold, US natural gas and oil prices slip on stronger US dollar
Gold, US natural gas and Brent crude oil revisit key technical support areas.
Gold hit by stronger US dollar
The gold price has taken a hit from a stronger US dollar and revisited its early September low at $1,689 per troy ounce before stabilising.
Gold remains within a technical downtrend, defined by lower highs and lower lows, and trades around 5.5% lower than at its August peak, having last week dropped to $1,689, close to its $1,681 July low, which represents key support. Failure there could trigger a swift sell-off to the March 2021 lows at $1,678 to $1,677 and the 200-week simple moving average (SMA) at $1,674.
Minor resistance sits at Monday’s $1,707 low and more significant resistance at Tuesday’s peak at $1,726. While it isn’t bettered on a daily chart closing basis, the downtrend remains intact.
US natural gas futures dropped out of bed
US natural gas futures dropped around 5% on Tuesday, hitting a four-week low as soaring output coupled with lower demand forecasts dragged prices down.
The front month contract slid to $7.85 on Tuesday, close to the 55-day SMA at $7.83, a slip through which would push the August low at $7.54 back to the fore.
The sharp drop in the price of natural gas occurred despite the fact that inventories are 11% lower than their five-year norm.
Resistance now sits between the early August high and mid-August low at $8.40 and $8.47.
Brent crude oil weighs on significant support
Brent crude oil is retesting the significant $92.43 to $91.08 July to August support area despite Monday’s OPEC+ output cut by 100,000 barrels a day from October, amounting to roughly 0.1% of global demand, to counter a potential supply boost from Iran and bolster oil prices which have rapidly dropped on fears of an economic slowdown.
Were a fall through and daily chart close below the $91.08 August low to ensue, as seems probable at the moment judging by the technical outlook, OPEC+ may decide on further output cuts to try and keep the price of Brent crude oil above the $90 mark.
A two-year uptrend line comes in at $87.85 and represents important support, having propped up the oil price since 2020.
While the price remains below Monday’s $96.54 high on a daily chart closing basis it remains in a medium-term downtrend. Above $96.54 meanders the 200-day SMA at $99.12 which acts as a proxy as to whether a market is in an up- or downtrend, depending on whether an asset’s price trades above or below it.
In case of Brent crude oil, the fact that it now trades below the 200-day SMA implies that it is in a downtrend.
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