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Natural Gas Continues To Plunge While Gold Breaks Above $1,340

Natural Gas Continues To Plunge While Gold Breaks Above $1,340

David de Ferranti, Currency Analyst

Talking Points

  • Natural gas heading for a loss of more than 10% for the week
  • Gold clears selling pressure at key resistance level
  • Light economic docket may leave gold to drift higher

Crude oil and natural gas are suffering further losses in Asian trading which follows reports from newswires that milder US weather may dampen heating demand for energy commodities. Meanwhile, gold is trading higher as the precious metal breaks through selling pressure around $1,336-$1,340.

Natural Gas Plunges as Oil Continues Slide

The energies space is extending losses with natural gas plunging by a further 2.61% for the session, bringing the total decline for the past 5 trading days to over 10%. Oil is also suffering losses as the commodity looks set to post its firstly weekly loss in 7 weeks. Newswires have attributed the declines to expectations that frigid US weather conditions may be set to ease, which may hamper heating demand.

WTI traders will likely turn towards the upcoming Department of Energy’s Weekly Petroleum Status Report for further cues. Distillate inventories are tipped to decline by 1.16M barrels which would mark the 7th consecutive weekly decline for the measure. A smaller-than-anticipated drawdown may signal weaker demand and could weigh on crude prices.

Gold and Silver Advance as US Dollar Flounders

Gold has cleared selling pressure around the $1,336 level and is drifting higher alongside gains for silver. The precious metals have likely benefited this week as the US Dollar suffers in the absence of risk aversion and safe-haven demand for the reserve currency.

Looking at the economic calendar; upcoming speeches from Fed officials and US housing figures may do little to shift the tide in the US Dollar’s favor, which in turn would leave gold to strengthen further. The prospect of continued stimulus cuts by the Federal Reserve has failed to materially dampen investor optimism in the past month which has left the greenback to flounder.

CRUDE OIL TECHNICAL ANALYSIS The 61.8% Fib Retracement level from the September High at $103.30 has acted to cap oil’s advance for the time-being. A Hanging Man candle formation on the daily is hinting at a reversal, however, a shift to a downtrend would be required before offering a bearish technical bias.

Gold_Tests_Key_Resistance_At_1291_Following_Yellen_Testimony_body_Picture_5.png, Natural Gas Continues To Plunge While Gold Breaks Above $1,340

Daily Chart - Created Using FXCM Marketscope 2.0

NATURAL GAS TECHNICAL ANALYSIS The plunge in natural gas prices has led to a spike in volatility for the commodity. A break below nearby buying support on the daily at 4.550 may open up the 4.210 level.

Gold_Tests_Key_Resistance_At_1291_Following_Yellen_Testimony_body_Picture_4.png, Natural Gas Continues To Plunge While Gold Breaks Above $1,340

GOLD TECHNICAL ANALYSIS The break above $1,336-$1,339 opens up the October high of $1,360 as the bulls continue to drive prices higher. An uptrend on the daily supports further gains for the commodity.

Gold_Tests_Key_Resistance_At_1291_Following_Yellen_Testimony_body_Picture_3.png, Natural Gas Continues To Plunge While Gold Breaks Above $1,340

Daily Chart - Created Using FXCM Marketscope 2.0

SILVER TECHNICAL ANALYSIS The silver bulls continue to battle sellers at the 22.00 level as the rate of change indicator signals a fading of upside momentum. A break higher would favor an advance towards 22.80.

Gold_Tests_Key_Resistance_At_1291_Following_Yellen_Testimony_body_Picture_2.png, Natural Gas Continues To Plunge While Gold Breaks Above $1,340

Daily Chart - Created Using FXCM Marketscope 2.0

COPPER TECHNICAL ANALYSIS Copper has found buying support as prices tested the 20 SMA and the 23.6% Fib Retracement level at 3.235. A recovery higher is likely to prompt sellers to emerge at the 3.290 level.

Gold_Tests_Key_Resistance_At_1291_Following_Yellen_Testimony_body_Picture_1.png, Natural Gas Continues To Plunge While Gold Breaks Above $1,340

Daily Chart - Created Using FXCM Marketscope 2.0

--- Written by David de Ferranti, Market Analyst, FXCM Australia

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.