Gold Tests Support At $1620 As Dollar Moves To New Highs

Key Insights

• Strong dollar and higher Treasury yields pushed gold to new lows. 
• Natural gas remains under pressure as traders are worried that Hurricane Ian will hurt demand. 
• WTI oil declines amid pullback in commodity markets. 

Gold Tests Yearly Lows

The strong dollar pushed gold to yearly lows. Treasury yields are also moving higher, and the yield of 10-year Treasuries managed to get above the psychologically important 4.00% level.

Most likely, gold will have no chance for a sustainable rebound until the rally in the dollar comes to an end. At this point, there is no demand for gold as a safe-haven asset, and all money is moving into the U.S. dollar.

Currently, gold is trying to settle below the support at $1620. In case this attempt is successful, it will move towards the next support level, which is located at $1600. A move below this level will push gold towards the support at $1575.

On the upside, the previous support at $1640 will serve as the first resistance level for gold. In case gold manages to settle back above $1640, it will head towards the next resistance at $1660. A successful test of this level will open the way to the test of the resistance at $1675.

Natural Gas Tries To Settle Below $6.70

Natural gas remains under pressure as traders believe that Hurricane Ian will hurt demand in the next few days.

The most recent EIA report, which indicated that working gas in storage increased by 103 Bcf, continues to serve as a bearish catalyst for natural gas markets. If the upcoming report on Thursday shows that stocks are rising at a robust pace, natural gas will find itself under more pressure.

In Europe, traders are focused on the explosions at Nord Stream pipelines. In the long-term, the news is bullish for U.S. markets as Europe will have to find more LNG to cover its needs. In the short-term, there is no real impact as Freeport LNG is not operational and the U.S. cannot increase exports.

WTI Oil Pulls Back After Yesterday’s Attempt To Rebound

WTI oil settled back below the $78 level as traders focused on strong dollar and recession worries.

Yesterday, WTI oil gained ground amid reports that OPEC+ may cut production targets by 1 million bpd. However, this news was not sufficient to provide significant support to oil markets.

The U.S. dollar is testing multi-decade highs, which indicates that global markets remain in a panic mode. From a big picture point of view, WTI oil remains in a downside trend, and it will need significant catalysts to gain sustainable upside momentum.

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