Silver Retreats As Dollar Rallies

Key Insights

• Precious metals found themselves under strong pressure as U.S. dollar rallied and Treasury yields moved higher after the release of the strong jobs data from the U.S. 
• WTI oil received some support after the release of the EIA report but traders remained cautious amid signs of weak demand in Asia. 
• Natural gas pulled back to new lows as warm weather continued to put pressure on demand. 

WTI Oil Rebounds After Yesterday’s Sell-Off

WTI oil  rebounded towards the $74 level after the release of the EIA Weekly Petroleum Status Report. The report indicated that crude inventories increased by 1.7 million barrels from the previous week, compared to analyst consensus of 1.15 million.

Total motor gasoline inventories declined by 0.3 million barrels, while distillate fuel inventories decreased by 1.4 million barrels. Domestic oil production grew from 12 million bpd to 12.1 million bpd.

While the report provided some support to oil markets, traders will likely stay cautious amid signs of weaker demand in Asia. According to recent reports, Saudi Arabia cut oil prices for both Asia and Europe. It looks that the recent surge in the number of new coronavirus cases in China has already put pressure on demand for oil.

Natural Gas Tests New Lows

Natural gas traders also had a chance to take a look at the EIA data today. The Weekly Natural Gas Storage Report indicated that working gas in storage declined by 221 Bcf from the previous week, compared to analyst consensus of -228 Bcf. Natural gas prices moved to new lows after the release of the EIA report.

The weather stays warm, and forecasts remain unfavorable for high natural gas consumption. If natural gas settles below the support at $3.60, it will move towards the next support level, which is located at $3.40.

Silver Moved Towards The $23 Level

Strong dollar and higher Treasury yields put significant pressure on precious metals in today’s trading session. Silver gained strong downside momentum and moved closer to the $23 level.

Gold settled below $1850 and is currently testing the support level at $1830. Platinum pulled back towards $1065, while palladium declined towards the $1720 level.

Copper Received Strong Support Near The 50 EMA

Copper managed to move back above the $3.80 level despite strong dollar. Yesterday, copper made an attempt to settle below the support at $3.75 and tested the 50 EMA at $3.72. The unsuccessful test of the 50 EMA is a bullish sign for copper markets, although copper’s near-term dynamics will still depend on the situation with coronavirus in China.

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