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Gold price weakens, while oil stalls and natural gas heads higher

Gold has dropped back for a second day, while WTI remains stalled below $111. Supply crunch fears continue to drive natural gas prices higher, however.

​Gold sinks for a second day

The breakout from trendline resistance last week has come under pressure, as the dollar begins a recovery that could spell the end of gold’s brief recovery from its mid-May low.

Having established a trend higher over the past few days, the price now looks at risk of breaking short-term support and beginning a reversal that will target the mid-May lows once more.

In the case of further losses, the price will target $1784, and then on down towards $1769, renewing the downtrend that began in mid-April.

A recovery above $1863 is needed to put the bullish view back in charge.

Gold chart Source: ProRealTime

WTI stalls below $111

The bounce of last week has begun to fizzle out, with little apparent desire to push higher in the short-term.

The past few days have seen the price stuck firmly below $111, although for the moment sellers are unable to drive it lower. Expectations of strong demand and the potential for further tightness in supply remain the main factors preventing a fresh turn to the downside, but for now these do not appear to have the strength to drive further price rises.

Clearly, any break higher requires the price to clear $111, which has been such a barrier to further progress in recent days. This would then bring the March highs at $115 into view.

For now the bullish view holds sway, if only cautiously, with the price needing a move below the 50-day simple moving average (SMA), currently $104.90, to suggest a deeper move towards April trendline support nearer $102 is in view.

WTI chart Source: ProRealTime

Natural gas eyes further gains

Despite being knocked back from its highs yesterday, gas continues to make headway.

Expectations of a supply crunch continue to drive price gains, as markets expect higher demand this summer as the US boosts its power use in hotter weather. In addition, institutional short positions are being closed out, driving prices higher as the contracts for June delivery near expiration.

Early trading has seen the price move on above the May peak, after yesterday’s attempt to push on above this level. Wednesday’s high at $9.425 now comes into view.

This drive higher seems set to continue, as the fundamentals support price appreciation, with a bearish view unlikely unless some kind of reversal back below $8 develops.

Natural gas chart Source: ProRealTime

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