WTI at 3-month highs, natural gas and gold prices sidelined

​Gold range trades above its 200-day SMA

The gold price continues to trade sideways above last week’s low and the 200-day simple moving average (SMA) at $1,841 whilst staying below last week’s high at $1,869, following the publication of less hawkish Federal Open Market Committee (FOMC) minutes last week.

With market players coming back after prolonged weekends in both catholic Europe and the USA, volatility in the price of gold is likely to rise again, ahead of the UK’s four-day Queen’s Jubilee weekend which begins on Thursday.

Above last week’s high at $1,869 lies the April low at $1,873. Further up, the mid- and late March highs can be spotted at $1,891 to $1,895 and are expected to act as resistance ahead of the early May high and 55-day SMA at $1,900 to $1,909.

Minor support below the 200-day SMA at $1,841 can be spotted at the 17 May high at $1,836.

WTI trades in three-month highs as EU bans most Russian oil imports

The price of West Texas Intermediate (WTI) crude oil has been rising every day for the past week and is now trading in three-month highs after European Union (EU) negotiators reached an agreement to ban 90% of Russian crude by the end of the year.

Demand for oil from China is also expected to pick up as large cities like Beijing and Shanghai are about to remove most of their stringent Covid-19 restrictions after a two-month long lockdown.

WTI is now trading at its highest level since 9 March and is gunning for the minor psychological $120 mark, above which the March peak can be seen at $126.74.

Slips should find support around the mid-May high at $113.30.

Natural Gas futures may soon decline as upside has become overextended

With the price of natural gas having risen by roughly 150% since the end of last year and the front month futures contract having hit a high of $9.43 last week amid ongoing fighting between Russian and Ukrainian troops in the Donbas region and heightened geo-political tensions, the psychological $10 mark seems to be within reach.

It should be noted, though, that several technical warning signs can be seen on the daily natural gas futures chart, namely a rising wedge formation and negative divergence on the daily Relative Strength Index (RSI).

A rising wedge is formed when new highs are being compressed. This pattern is generally speaking a bearish chart formation as it indicates a possible trend reversal during an uptrend when the price slips through the lower uptrend line. This currently comes in at $8.56.

Furthermore, the latest price high at $9.43 has been accompanied by negative divergence on the daily RSI which has made a lower high, thus diverging from the price. More often than not such a pattern leads to at least a short-term consolidation being seen and sometimes to a complete trend reversal.

Both of the above reasons mean that a fall through and daily chart close below the last reaction low – a low on a daily candle which is lower than that of the candle to its left and to its right – at Friday’s $8.29 low would likely trigger a bearish reversal and slide back towards the 55-day SMA at $7.00.

Strong resistance remains to be seen between the early and late May highs at $9.01 to $9.43.