Gold and oil recover but lumber prices keeps falling as home sales demand dries up
While a weaker dollar has helped gold and oil, lumber prices continue on their downward trajectory.
Gold’s recovery continues
It may be that last week’s trip below the 200-day simple moving average (SMA) has been enough to tempt out the dip buyers.
After a straight-line move from the April high near $2000, the gold price has managed to stabilise around $1800, briefly heading below $1800 before rebounding.
Recent days have seen a back-and-forth between risk-on and risk-off days, but a short-term weakening of the US dollar has given gold the chance to rally back above the 200-day SMA.
Additional upside now targets $1863 and $1875, with a bigger move heading back to $1905. It would require a reversal below $1830 to suggest that a fresh test of the lows of mid-May is underway.
WTI eyes bounce to fresh weekly high
Price gains here over the past few days have failed to carry the price back above last week’s high, but with risk appetite evidently recovering it is possible that a fresh test of $113 will result.
Sentiment around the global economy remains somewhat muted, not helped by lockdowns in China and the possibility of a recession in the US and elsewhere.
However, the continued war in Ukraine means that search for alternative supplies of oil to Russian output goes on. This may well offset any growing bearishness for the time being.
Further gains from current levels target $114.83, and then on towards $125 and the highs of early March. For the moment the bullish view appears to hold sway, and it would need a reversal back below $104 and the 50-day SMA to hand the sellers the initiative once again.
Lumber slumps to new 2022 low
Lumber prices continue to be one of the big fallers of this market, dropping to a new low for the year as figures for US existing home sales revealed a slowdown in April.
The Federal Reserve’s fight against inflation, which has stepped up a gear with the introduction of 50 basis point (bps) rate hikes, and discussion of 75bps moves, this has driven a surge in US mortgage rates, hitting demand for both new and existing homes.
Having hit a new eight-month low, the price looks set for further declines. Even a rebound towards $800 would still leave the price below trendline resistance from the March highs, and would set up a lower high.
Below $663, the price heads towards $592, the low from around the time of the 2021 presidential election.
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