In a volatile global market, energy commodities like oil and natural gas, alongside precious metals like gold, continue to face shifting dynamics influenced by a mix of weather forecasts, economic data, and geopolitical concerns. As investors navigate these fluctuations, financial strategists from Fibovest explore the impacts of recent trends on key market movements, shedding light on the driving forces behind oil and gold prices and their future outlook.
Natural Gas Faces Pressure Amid Mild Weather Forecasts
Natural gas markets are experiencing notable pressure as traders adjust their expectations based on changing weather patterns. With forecasts indicating warmer temperatures, the demand for natural gas, which typically rises during colder months, has seen a decrease. This shift has led to a sell-off, and natural gas prices are now vulnerable to further declines.
Currently, the support level for natural gas stands between $4.00 and $4.05. If this range is broken, the commodity could test the next support zone around $3.65 to $3.70. Traders are likely to keep an eye on long-term weather predictions and seasonal trends, as any signs of cooler weather could spark a rebound in prices. However, for now, the bearish sentiment driven by milder forecasts seems to dominate.
WTI and Brent Oil: Rebound and Optimism Amid Falling Gasoline Inventories
In contrast to natural gas, oil markets are showing positive momentum. West Texas Intermediate (WTI) crude oil prices have climbed higher following the release of the latest Energy Information Administration (EIA) report. The report highlighted a significant decline of 5.7 million barrels in gasoline inventories from the previous week, which fueled optimism among traders that oil demand is strengthening despite broader economic concerns.
WTI oil prices are currently testing the $67.50 level. If the commodity manages to settle above this mark, it could potentially push toward the psychologically important $70.00 barrier. This increase is not only driven by inventory data but also by broader market sentiment that supports a rebound in oil prices.
Brent oil, which has been moving in tandem with WTI, is also seeing positive price action. As Brent oil approaches the $71.00 level, many traders are looking for a breakout, betting on further upside momentum. A successful test of the $71.00 to $71.50 resistance zone could open the door for a more sustained rally, giving Brent oil a chance to extend gains in the near term.
Gold Prices on the Rise Amid Economic Uncertainty
Gold prices in India rose on Thursday, with data compiled by FXStreet showing an increase in the price per gram and tola. The price per gram climbed to 8,241.26 INR, up from 8,211.09 INR on the previous day, while the price per tola reached 96,124.48 INR, up from 95,772.53 INR.
The rise in gold prices is partly attributed to the ongoing uncertainty in the global economy, driven by fluctuating yields on US Treasury bonds and mixed signals from inflation data. Despite the recent recovery in US 10-year Treasury bond yields, which climbed three basis points to 4.314%, gold has remained resilient. The yield on US Treasury Inflation-Protected Securities (TIPS), which inversely correlates with gold prices, also increased slightly, capping some of the upward potential for the non-yielding metal.
However, gold’s price movement continues to be supported by inflation dynamics. The US Consumer Price Index (CPI) for February showed a year-on-year increase of 2.8%, slightly below the anticipated 2.9% and down from 3.0% in January. Core CPI, excluding volatile food and energy prices, dipped to 3.1%, down from 3.3% in January. This moderation in inflation suggests that the disinflationary trend in the US economy is continuing, supporting gold’s appeal as a hedge against inflation.
Economic and Geopolitical Context: What’s Driving the Markets?
Global economic indicators are painting a mixed picture, adding to the complexity of commodity market trends. The latest figures from the Atlanta Federal Reserve’s GDPNow model predict a contraction of -2.4% in the US economy for the first quarter of 2025, marking the first negative GDP print since the COVID-19 pandemic. This downturn could trigger concerns about a potential recession, leading investors to seek safe-haven assets like gold.
Meanwhile, geopolitical factors are also at play. Rising oil prices are not only due to supply and demand factors but also influenced by broader market expectations of a strong economic rebound, despite trade tensions and global uncertainties. If the oil market continues to tighten due to falling inventories and the potential for increased demand, this could support higher prices in the short term.
Conclusion
The commodity markets are responding to a combination of economic reports, supply-and-demand fundamentals, and investor sentiment. While oil prices are benefiting from falling inventories, natural gas faces challenges from weak seasonal demand. Meanwhile, gold’s ability to climb despite higher Treasury yields suggests that market participants remain cautious about long-term economic conditions.
