The Price of Gold Vs The Price of Crude Oil


At the moment, the sharp move down in Crude Oil is Bullish gold prices

Monday will go down in the scrap books as a historic day for Crude Oil prices, but energy-exposed stocks did not collapse as some envisioned.

The price on the futures contract for WTI Crude Oil that expires Tuesday fell into negative territory to -37.63 bbl. Yet the S&P 500 Energy Index fell only 3.3%, the most since last Thursday, and even posted a brief gainer earlier in the session.

Leading decliners Occidental Petroleum Corp (NYSE:OXI). and Pioneer Natural Resources Co. (NASDAQ:PDX) posted drops in the single digits. In Canada, Toronto’s energy gauge was off just 0.6%.

The Big Q: What does the dive in Crude Oil mean for Gold prices?

The Big A: As long as Crude is not in the tank too long, it is positive for gold.

NA storage facilities are full and there is no place to put new production, as the huge drop in gasoline demand resulted in prices at the US pump going for less than $1 gal at some locations.

Monday’s fall on Crude Oil price losses were also triggered by the May WTI contract expiry Tuesday, which could mean that a bottom in prices is close.

Black Gold has been a significant under-performer for over year now, what with production politics driving prices due South.  The global economic shut down over the last several weeks that reduced demand coming out of the coronavirus chaos has not helped on the buy side.  The 19 – 20 support mark must hold or I see lower prices ahead.

The June WTI Crude futures contract settled at 20.30 bbl off 18.9%. 

The recent Crude Oil dive is reflective of the expiring May WTI contract, with no place to go but down and is more likely to mark a bottom in prices, as a similar condition in Y 2008 did.

At the moment, the sharp move down in Crude Oil is Bullish gold prices.

Gold prices again breached the psych mark at 1,700 oz Monday morning, as Gold Bulls remain in control

Gold futures settled up 12.40 (+0.7%) to 1,711.20 oz, helped in part by Monday’s historic losses in WTI Crude Oil futures.

The gold Bulls have the firm overall near-term technical advantage. The price uptrends are in place on the daily, weekly and monthly charts.

Bulls’ next Northside price target is to produce a close in June futures above round psych resistance at 1,800.00.

Bears’ next near-term Southside price target is pushing futures prices below Key technical support at 1,650.00. 1st resistance is seen at 1,725.00 oz.”

We here at HeffX-LTN are overall Bullish gold in here, eventually projecting the precious Yellow metal hitting new record highs in USD terms. Gold has made new highs in most currencies and is just a matter of time that it will in USD terms too.

Gold is an asset worth owning,” Shayne Heffernan, PhD, Economist.

Have a healthy day, Keep the Faith!

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