Daily Commodities: Expect Volatility In Gold And Natural Gas Markets

Key Insights

• Natural gas markets will be volatile after the release of the EIA report. 
• Oil continues its attempts to gain more upside momentum as risk appetite is growing.
• Gold traders will focus on the U.S. PPI report, which will have a significant impact on gold markets. 

Natural Gas

Today, natural gas traders will focus on the EIA Weekly Natural Gas Storage Report. Analysts expect that working gas in storage will increase by 39 Bcf from the previous week.

The weather remains favorable for strong natural gas demand, and natural gas prices continue to rebound after the recent pullback.

The situation in the European natural gas markets is extremely tense. However, high prices in Europe can only provide psychological support to U.S. natural gas bulls as Freeport LNG is not operating.

Oil

WTI oil and Brent oil prices continue to rebound despite the resumption of oil flows through the “Druzhba” pipeline from Russia to EU.

It looks that the recent U.S. inflation report provided some support to oil markets as traders have started to price in a 50 bps hike at the next Fed meeting.

Most likely, oil markets will remain sensitive to general risk appetite. Recession worries have recently put significant pressure on the price of oil. In case general market sentiment improves, oil may gain additional upside momentum in the upcoming trading sessions.

Gold

Yesterday, gold made an attempt to settle above the $1800 level but pulled back after the release of U.S. inflation reports.

Today, traders will focus on U.S. PPI data, which will have a material impact on the U.S. dollar and Treasury yields. Weaker dollar and lower yields are bullish for gold, so a weaker-than-expected report may provide some support to gold prices.

However, traders should keep in mind that gold prices also depend on demand for safe-haven assets. If traders rush into riskier assets, gold may find itself under pressure even when dollar drops and Treasury yields decline.

From a big picture point of view, gold needs to settle above the $1800 level to continue its rebound. In case gold failes to settle above this important level, it may start to slide towards the $1750 level.

For a look at all of today’s economic events, check out our economic calendar.