Gold Slides Below $1700 As U.S. Dollar Tests New Highs

Key Insights

• Higher yields and strong dollar pushed gold below the $1700 level. 
• Russia’s Deputy Prime Minister Novak said that the country would not sell oil to those who impose a price cap on Russian oil, but oil markets continued to move lower. 
• Natural gas gained some ground after the EIA report. 

Gold Remains Under Strong Pressure

Gold moved below the $1700 level as the U.S. dollar tested new highs after ISM Manufacturing PMI report exceeded expectations. Treasury yields have also moved higher, serving as an additional bearish catalyst for gold and other precious metals.

Gold managed to settle below the support at $1715 and is trying to settle below the next support level at $1700. In case this attempt is successful, gold will move towards the yearly lows at the $1680 level. A move below this level will open the way to the test of the support at $1650.

On the upside, a move above $1700 will push gold back towards the $1715 level. If gold climbs above this level, it will head towards the next resistance level at $1730.

Meanwhile, silver managed to settle below $18 and made an attempt to test the $17.50 level. Platinum declined towards the $800 level, while palladium moved below $2000.

WTI Oil Retreats Despite Hawkish Comments From Russia’s Novak

WTI oil moved towards the $87 level as traders remained focused on recession risks. The strong U.S. dollar has put additional pressure on oil markets.

Today, Russia’s Deputy Prime Minister Novak (who previously served as an Energy Minister) said that Russia would not supply oil to companies or countries that impose a price cap on Russian oil. Tomorrow, G7 finance ministers are expected to approve an oil price cap plan.

At this point, the market is not worried about Russia’s potential reaction to the G7 plan. Traders are focused on current developments, and the price of oil continues to decline amid a broad pullback in commodity markets.

Natural Gas Moves Higher After EIA Report

Natural gas moved towards $9.35 after the release of the EIA Weekly Natural Gas Storage Report. The report indicated that working gas in storage increased by 61 Bcf from the previous week, compared to analyst consensus of 58 Bcf.

Natural gas prices received strong support near the $9.00 level as traders were ready to bet on healthy demand. In case natural gas manages to settle above the resistance level at $9.35, it will have a good chance to gain additional upside momentum.

Copper Retreats As Sell-Off Intensifies

Copper prices settled below $3.50 and declined towards $3.40 as strong dollar and recession worries put significant pressure on copper markets.

Traders fear that aggressive central banks will hurt economic growth and demand for copper. At this point, copper markets look ready to start a new downside trend.

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