In a recent market commentary, seasoned commodities analyst Phil Streible of Blue Line Features LLC shared his insights on the overnight price action in the oil and precious metals markets.
"The big mover and shaker in the overnight session here was the crude oil market," Streible noted. "It seemingly gapped lower over $3, sold off from there, and then kind of rolled over." As a result, crude oil futures were down 6%, or $4.30, trading at $67.48 per barrel.
Despite the sharp decline, Streible believes crude oil prices may have found a floor in this area. "I think that crud all prices can find some kind of floor in this area and we could start to rise from here," he said. The analyst plans to look at calculated risk call options going out to March, as well as the $100 per barrel contract, to layer into the steady decline and dollar-cost average.
The precious metals market also saw significant overnight pressure. December gold futures were down $10.90, currently trading at $2,743, after reaching a high of $2,756.60. Silver futures also declined, dropping 18 cents to $33.60, after hitting a high of $33.88 in the overnight session.
Streible noted that traders are "scaling back some of their larger bets" in gold futures as they wait to see how upcoming economic data will unfold. "With 30% of the S&P 500 reporting earnings in this barrage of economic data, you could see another breakdown in prices here," he warned.
Turning to the challenges facing gold mining companies, Streible highlighted the recent struggles of Newmont Mining, the world's largest gold miner. "We saw that you know these gold mining companies are really struggling to isolate themselves from rising inflation costs and what I'm specifically talking about is Newmont mining," he said. Newmont's shares posted their biggest daily drop since 1997, falling 15% on Thursday and an additional 3% on Friday.
Streible cautioned investors against solely focusing on mining stocks, suggesting a more diversified approach to precious metals exposure. "If you want exposure to one of these Metals why not just buy the mod itself and why not utilize the Futures contracts where you can control the leverage and things like that," he advised.
The analyst also provided key technical levels to watch, identifying $2,730 as the first line of support for gold, followed by $2,714. For silver, he noted $33.24 as the first level of support, with $32.59 below that.
As the global markets navigate this period of heightened volatility, investors would be wise to heed Streible's experienced perspective on navigating the oil and precious metals landscape.
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