Price of Gold Fundamental Daily Forecast – Lack of Clarity Over First Fed Rate Hike Fueling Upside Momentum

Gold futures jumped to their highest level since September 7 on Friday before giving back about half of its earlier gains into the close. Besides closing higher for the session, the market also posted its second consecutive weekly gain. A weaker U.S. Dollar helped drive up foreign demand for the dollar-denominated asset as well as growing inflationary pressure.

On Friday, December Comex gold settled at $1796.30, up $14.40 or +0.81%.

Comments from key Fed speakers helped fuel the volatility on Friday when they made conflicting remarks about inflation.

Atlanta U.S. Federal Reserve President Raphael Bostic may have fanned the bullish flames when he said he expects high inflation to persist into 2022 and the central bank should raise interest rates by the end of the year.

Gold prices gave back half of their gains, however, after U.S. Federal Reserve Chair Jerome Powell said he expected inflation to ease next year and that the U.S. central bank was on track to begin winding down its stimulus.

Fed’s Bostic Sees Higher Prices into 2022, then Higher Interest Rates

Supply chain disruptions and labor market constraints, coupled with strong consumer demand, could keep inflation high into 2022, Atlanta Federal Reserve Bank President Raphael Bostic said on Thursday.

Once those issues get resolved, labor markets will heal and the Fed will be able to start raising interest rates, he added.

“It’s becoming clearer and clearer that this is going to last into 2022,” Bostic said of rising inflation pressures. “Part of the ultimate answer to how long this will take will be how quickly we resolve some of the coronavirus issues as well as some of the supply chain challenges that are happening at a global level.”

“Demand remains very strong,” he added, so if the supply and labor constraints can get resolved, “I think there’s a lot of space for the economy to grow.”

“I was thinking late third, maybe early 4th quarter for 2022,” Bostic said in a CNBC interview, when asked when he had penciled in an interest rate hike. By then, he said, the U.S. economy will be back to full employment.

Time for Fed to Taper Bond Purchases but Not to Raise Rates, Powell Says

Federal Reserve Chair Jerome Powell on Friday said the U.S. central bank should start the process of reducing its support of the economy by cutting back on its asset purchases, but should not yet touch the interest rate dial, Reuters wrote.

“I do think it’s time to taper; I don’t think it’s time to raise rates,” Powell said in a virtual appearance before a conference, noting that there are still five million fewer U.S. jobs now than there were before the coronavirus pandemic. He also reiterated his view that high inflation will likely abate next year as pressures from the pandemic fade.

“We think we can be patient and allow the labor market to heal,” he said.

Near-Term Forecast

Gold traders can expect to see heightened volatility as we approach the next Federal Reserve meeting on November 2-3. The price action on Friday suggests traders are looking for clarity from the Fed regarding the timetable for its first rate hike.

Until the bulls are comfortable with the timing of the first rate hike, they’re likely to buy the dips while probing the upside for buy stops.

We haven’t seen evidence of investors chasing the market higher, but we do believe that the bears, betting on tapering and a sooner-than-expected rate hike, are selling rallies.

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

Natural Gas Price Fundamental Daily Forecast – Gains Capped by Mild Temperatures, Narrowing Storage Deficit

Natural gas prices are inching higher early Friday after the market was driven lower the previous session on milder weather forecasts and a bigger-than-expected injection into storage last week.

At 08:24 GMT, December natural gas futures are trading $5.379, up $0.033 or +0.62%.

NOAA Forecasts Warmer than Average Winter Weather

Winter weather in much of the United States is expected to be warmer than average, according to the National Oceanic and Atmospheric Administration (NOAA).

Across much of the Lower 48, the demand outlook leans toward the bearish side.

Above-average temperatures are favored across the South and most of the eastern United States as La Nina conditions developed for a second consecutive winter.

Warm winter conditions in the East could minimize heating demand, while above average temperatures in the South could leave major markets with mild weather that drives neither heating nor cooling needs.

Natural Gas Intelligence’s (NGI) Keven Dobbs noted, “Looming winter freezes could drive elevated demand for natural gas in parts of the northern United States, while festering drought conditions in the Southwest could fuel consumption when weather heats up next spring to offset lighter hydropower.”

US Energy Information Administration Weekly Storage Report

The EIA reported on Thursday that domestic supplies of natural gas rose by 92 billion cubic feet (Bcf) for the week-ended October 15. That was slightly larger than the average increase of 88 Bcf forecast by analysts polled by S&P Global Platts.

Natural Gas Intelligence (NGI) reported ahead of the report that analysts responding to major surveys projected a build near 90 Bcf. Reuters polled 17 analysts, whose estimates ranged from builds of 80 Bcf to 97 Bcf, with a median injection of 90 Bcf. The average of 14 estimates in a Wall Street Journal poll also landed at a 90 Bcf injection. The median of a Bloomberg survey, in which projections ranged from 84 Bcf to 95 Bcf, was 91 Bcf. NGI modeled a 95 Bcf increase in inventories.

Total stocks now stand at 3.461 trillion cubic feet (Tcf), down 458 Bcf from a year ago and 151 Bcf below the five-year average, the government said.

Daily Forecast

Technically, the major support zone is $5.269 to $4.956. This area stopped the selling at $5.070 on Tuesday. If it fails to hold, prices could collapse with $3.944 a potential downside target. This would likely occur if the new forecasts for November come in warmer than normal.

On the upside, buyers would have to overtake two resistance zones at $5.591 to $5.713 and $5.832 to $6.011 before the market can make another run at its recent top at $6.593.

We could be in the “sell the rally” mode until the weather turns colder.

Analysts at Energy Aspects said in a recent research note, “Ultimately, the prospect of gas rationing prices and deliverability risks hinges on how cold the winter will be,” the firm said. “Conditions will have to border on 10% colder than normal on an average basis, or there must be significant cold early in the season.”

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

Oil Price Fundamental Daily Forecast – Lower Coal, Gas Prices Could Trigger Short-Term Drop of $3.00 – $4.00

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging lower on Friday as demand for oil products in power generation eased amid weaker coal and gas prices. Meanwhile, a forecast for a mild U.S. winter dampened concerns over potential shortages of heating fuels late this year and early next.

At 07:19 GMT, December WTI crude oil is trading $82.31, down $0.19 or -0.23%. This puts the U.S. benchmark slightly above last week’s close at $81.73.  December Brent crude oil is at $84.48, down $0.13 or -0.15%. It is currently trading lower for the week.

European Gas Prices Fall as Drop in Coal Markets Offsets Higher Demand

British and European wholesale gas prices mostly fell on Thursday, driven by losses in the coal market that trumped forecasts of higher demand amid colder weather and less wind. Gas was taking its cue from a drop in the coal market, with gas flows and weather forecasts moving sideways, a trader told Reuters.

Dutch wholesale gas prices for November were under pressure as well as first quarter U.K. gas prices. Meanwhile, China’s thermal coal futures fell the maximum permitted 11% on Thursday, after Beijing signaled it might intervene to cool surging prices that have led to power shortages across much of the country. Consequently, European coal contracts also fell.

Additionally, the British gas system was forecast 9 million cubic meters (mcm) per day over-supplied on Thursday morning, according to National Grid.

NOAA Forecast of Mild US Winter Spurs Retreat from Multi-Year Highs

Oil prices are being capped by a forecast calling for a warm U.S. winter despite lingering concerns over tight supply and a global energy crunch.

Winter weather in much of the United States is expected to be warmer than average, the National Oceanic and Atmospheric Administration (NOAA) said Thursday.

“The report, indicating drier and warmer conditions across the southern and eastern U.S., is putting pressure on the complex,” said Bob Yawger, director of energy futures at Mizuho.

Tight US, OPEC+ Supply Expected to Remain Supportive

Prices rallied on Wednesday and Thursday in reaction to the U.S. Energy Information Administration weekly report that showed tighter crude and fuel inventories. Additionally, crude stocks at the Cushing, Oklahoma futures hub fell to a three-year low.

Supply is likely to remain tight over the near-term as OPEC+ is likely to stick to its plan for gradual output increases while demand is expected to reach pre-pandemic levels.

Daily Forecast

Lower coal and gas prices as well as technically overbought conditions could help erase the premium that had been built into the market due to expectations of a power switch from gas and coal to crude oil for heat generation. That’s a fancy way of saying prices are likely to be under pressure on Friday.

Brent crude oil is already trading lower for the week and WTI could follow shortly. Conditions appear to be ripe for a $3.00 to $4.00 correction over the short-run.

E-mini NASDAQ-100 Index (NQ) Futures Technical Analysis – Momentum Shifts Lower on Trade Through 15301.00

December E-mini NASDAQ-100 Index futures are trading higher shortly after the cash market close on Thursday after recovering from early session weakness. The rally was primarily driven by a sharp rise in Tesla Inc.

At 20:18 GMT, December E-mini NASDAQ-100 Index futures are trading 15402.75, up 25.25 or +0.16%.

Tesla Inc fell 1% I premarket trading as it said on Wednesday its upcoming factories and supply-chain headwinds would put pressure on its margins after it beat Wall Street expectations for third-quarter revenue. By the end of the session, however, Tesla was up 3.26%.

The biggest movers were Match Group Inc, Peloton Interactive and Netflix, which posted gains of 10.29%, 4.61% and 4.48%, respectively.

Late in the session, the index is pulling back from its intraday high after Intel Corp reported third-quarter revenue below Wall Street expectations as it trails behind rivals with faster chips to meet demand for computing devices for hybrid work. Shares of Intel, one of the world’s largest chipmakers, fell 4% in extended trading.

Daily December E-mini NASDAQ-100 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reestablished on Thursday after buyers took out 15446.50. A trade through 15702.25 will reaffirm the uptrend.

A move through 14585.50 will change the main trend to down. This is not likely, but the index is trading inside the window of time for a closing price reversal top.

A closing price reversal top is a potentially bearish chart pattern that could lead to an eventual change in trend, but most often leads to the start of a 2 to 3 day correction.

The minor trend is also up. A trade through 15301.00 will change the minor trend to down. This will also shift momentum to the downside.

The short-term range is 15702.25 to 14367.75. The index is trading on the strong side of its retracement zone at 15192.50 to 15035.00, making it support.

Daily Swing Chart Technical Forecast

The direction of the December E-mini NASDAQ-100 Index futures contract early Friday is likely to be determined by trader reaction to 15381.25.

Bullish Scenario

A sustained move over 15381.25 will indicate the presence of buyers.

Bearish Scenario

A sustained move under 15381.25 will signal the presence of sellers. This would put the index in a position to form a potentially bearish closing price reversal top on the daily chart.

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

U.S. Dollar Index (DX) Futures Technical Analysis – Confirmation of Reversal Bottom will Shift Momentum

The U.S. Dollar jumped on Thursday against a basket of major currencies, posting a potentially bullish closing price reversal bottom in the process. The early stages of this chart pattern suggest the buying may be greater than the selling at current price levels, and momentum may be getting ready to shift to the upside. But it is going to take some work to change the main trend to up.

On Thursday, December U.S. Dollar Index futures settled at 93.758, up 0.223 or +0.24%.

Fundamentally, the greenback was supported by better jobs and housing data, and a rise in U.S. Treasury yields.

Data showed that the number of Americans filing new claims for unemployment benefits dropped to a 19-month low last week, pointing to a tightening labor market, though a shortage of workers could keep the pace of hiring moderate in October.

Additionally, U.S. home sales also surged to an eight-month high in September, but higher prices as supply remains tight are squeezing first-time buyers out of the housing market.

Daily December U.S. Dollar Index

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, the closing price reversal bottom suggests momentum may be getting ready to change.

A trade through 94.570 will change the main trend to up. A move through 93.475 will negate the closing price reversal bottom and signal a resumption of the downtrend.

The minor trend is also down. A trade through 94.175 will change the minor trend to up. This will confirm the shift in momentum.

Based on the close at 93.758, the next potential resistance is a series of 50% levels at 93.770, 93.825 and 94.020.

On the downside, potential support is lined up at 93.580 and 93.430, followed by 93.255 and 93.160.

Daily Swing Chart Technical Forecast

The direction of the December U.S. Dollar Index early Friday is likely to be determined by trader reaction to 93.770.

Bullish Scenario

A sustained move over 93.770 will indicate the presence of buyers. The first target is 93.825. This is a potential trigger point for an acceleration to the upside with 94.020 the next target.

Bearish Scenario

A sustained move under 93.770 will signal the presence of sellers. This could trigger a sharp break into 93.580.

Taking out 93.580 could lead to a test of 93.475. A move through this level will signal a resumption of the downtrend with 93.430 the next target.

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

Crude Oil Price Update – Trade Through $80.78 Confirms Reversal Top, Changes Main Trend to Down

U.S. West Texas Intermediate crude oil futures closed lower on Thursday after posting a new multi-month high earlier in the session as a forecast for a warm U.S. winter put the brakes on the rally.

Oil also came under pressure from a drop in coal and natural gas prices. In China, coal fell 11%, extending losses this week since Beijing signaled it might intervene to cool the market.

On Thursday, December WTI crude oil futures settled at $82.50, down $0.92 or -1.10%.

Winter weather in much of the United States is expected to be warmer than average, according to a National Oceanic and Atmospheric Administration (NOAA) report. Warmer winter temperatures could reduce demand for natural gas, which would in turn dampen the need for crude oil and coal for power generation.

Daily December WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, but the second closing price reversal top this week could be a sign that momentum is getting ready to shift to the downside.

A trade through $83.96 will negate the closing price reversal top and signal a resumption of the uptrend. A move through $80.78 will change the main trend to down.

The minor range is $80.78 to $83.96. Its 50% level or pivot at $82.37 is potential support.

The second minor range is $78.78 to $83.96. Its 50% level at $81.37 is the last potential support level before the main bottom at $80.78.

Additional support targets are $79.32 and $78.39.

Daily Swing Chart Technical Forecast

The direction of the December WTI crude oil market on Friday is likely to be determined by trader reaction to $82.37.

Bullish Scenario

A sustained move over $82.37 will indicate the presence of buyers. If this move creates enough upside momentum then look for an intraday surge into $83.96. Taking out this level could trigger an acceleration into a seven-year high at $85.25.

Bearish Scenario

A sustained move under $82.37 will signal the presence of sellers. If this generates enough downside momentum then look for a break into the pivot at $81.37, followed closely by the main bottom at $80.78.

Taking out $80.78 will change the main trend to down. This could trigger an acceleration into a potential support cluster at $79.32, $78.78 and $78.39.

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

USD/JPY Forex Technical Analysis – Closing Price Reversal Top Confirmed with 112.760 Next Potential Target

A choppy performance by U.S. Treasury yields and a mixed performance in the U.S. stock market helped drive the Dollar/Yen lower on Thursday. Technical factors also played a role in the Forex pair’s weak performance.

On Wednesday, the Dollar/Yen posted a closing price reversal top after the 12 day rally stopped short of the November 6, 2017 main top at 114.728. This chart pattern was confirmed on Thursday when sellers took out 114.082, shifting momentum to the downside, but not signaling a change in trend.

On Thursday, the USD/JPY settled at 114.017, down 0.319 or -0.28%.

A mixed performance in the U.S. stock market helped fuel some safe-haven buying into the Japanese Yen. The benchmark S&P 500 boasted a record closing high and its seventh straight session of gains on Thursday while the NASDAQ Composite recovered from an early setback. However, a tumble in IBM shares weighed on the Dow.

Daily USD/JPY

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum shifted to the downside with the confirmation of Wednesday’s closing price reversal top.

A trade through 114.694 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a trade through 110.826.

The short-term range is 110.826 to 114.694. Its 50% level at 112.760 is the next downside target. Since the main trend is up, buyers are likely to come in on a test of this level.

Daily Swing Chart Technical Forecast

The direction of the USD/JPY early Friday is likely to be determined by trader reaction to 114.172.

Bearish Scenario

A sustained move under 114.172 will indicate the presence of sellers. Taking out 113.650 will indicate the selling pressure is getting stronger. If this move creates enough downside momentum then look for the selling to possibly extend into the 50% level at 112.760 over the near-term.

Bullish Scenario

A sustained move over 114.172 will signal the presence of buyers. If this generates enough upside momentum then look for buyers to make a run at 114.694 to 114.728.

Taking out 114.728 will be a sign of strength and could trigger an acceleration to the upside with 115.501 and 115.615 the next targets.

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

Gold Price Futures (GC) Technical Analysis – Chart Pattern Suggests Way of Least Resistance is Up

Gold futures closed lower on Thursday after posting a choppy, two-sided trade. The market rose early in the session as investors expressed concerns over the lack of clarity from the Federal Reserve on how it plans to deal with rising inflation. The market topped and prices turned lower later in the session as Treasury yields rose and the U.S. Dollar firmed.

On Thursday, December Comex gold futures settled at $1781.90, down $3.00 or -0.17%.

U.S. benchmark 10-year Treasury yields climbed to a five-month peak as a quickly recovering economy renewed questions about when the Federal Reserve will raise interest rates.

Daily December Comex Gold

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1801.90 will signal a resumption of the uptrend. A move through $1760.30 will change the main trend to down.

Gold is currently trapped inside a series of retracement levels. This is helping to hold the market in a trading range, while producing a choppy trade.

Based on the close at $1781.90, potential support levels are a series of 50% levels at $1779.00, $1773.70, $1765.90, $1761.50 and $1757.40.

On the upside, a pair of 50% levels at $1795.00 and $1800.00 are potential resistance.

The current chart pattern suggests $1800.00 and $1757.40 are potential breakout levels.

Daily Swing Chart Technical Forecast

The direction of the December Comex gold market early Friday is likely to be determined by trader reaction to $1779.00.

Bullish Scenario

A sustained move over $1779.00 will indicate the presence of buyers. The first potential upside target is $1790.30. This is followed by a 50% level at $1795.00 and a resistance cluster at $1800.00 – $1801.90.

Bearish Scenario

A sustained move under $1779.00 will signal the presence of sellers. This could lead to a labored break with the next likely downside targets lined up at $1773.70, $1765.90 and a support cluster at $1761.50 – $1760.30.

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

E-mini Dow Jones Industrial Average (YM) Futures Technical Analysis – Due for Short-Term Correction

December E-mini Dow Jones Industrial Average futures inched higher on Thursday after recovering from an early sell-off. The blue chip average was under pressure before the opening as a tumble in IBM shares weighed on the Dow, but managed to eke out a small gain as IBM recovered and a surge in Microsoft attracted new investors.

On Thursday, December E-mini Dow Jones Industrial Average futures settled at 35480, up 3 or +0.01%.

After hitting a new contract high the previous day the E-mini Dow was in the red for most of Thursday’s session as IBM fell 9.6% after missing Wall Street estimates for quarterly revenue as orders in one business segment declined ahead of a spinoff next month.

Daily December E-mini Dow Jones Industrial Average

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through 35541 will signal a resumption of the uptrend.

A move through 33984 will change the main trend to down. This is highly unlikely, but Friday’s session will be the seventh day up from the last main bottom. This will put the E-mini Dow inside the window of time for a potentially bearish closing price reversal top.

The minor range is 33984 to 35541. Its retracement zone at 34763 to 34579 is the nearest support. This zone will move up as the Dow moves higher.

The short-term range is 33383 to 35541. Its retracement zone at 34462 to 34207 is the next support area and value zone.

Daily Swing Chart Technical Forecast

The direction of the December E-mini Dow early Friday is likely to be determined by trader reaction to 35480.

Bullish Scenario

A sustained move over 35480 will indicate the presence of buyers. Taking out 35541 will indicate the buying is getting stronger.

Bearish Scenario

A sustained move under 35480 will signal the presence of sellers. Taking out 35308 and 35272 will indicate the selling pressure is getting stronger. If this move generates enough downside momentum then look for the selling to possibly trigger an acceleration to the downside.

Closing Price Reversal Top Chart Pattern.

Taking out 35541 then closing below 35480 will form a potentially bearish closing price reversal top. This won’t change the main trend to down, but if confirmed, it could trigger the start of a 2 to 3 day correction.

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

AUD/USD Forex Technical Analysis – Confirmation of Closing Price Reversal Top Could Trigger 2-3 Day Correction

The risk sensitive Australian Dollar slipped on Thursday as concerns about rising inflation and less-loose central bank policy dented risk sentiment. The Aussie started the session higher before closing lower, forming a potentially bearish closing price reversal top. The confirmation of this chart pattern will shift momentum to the downside.

On Thursday, the AUD/USD settled at .7465, down 0.0050 or +0.67%.

Fundamentally, the U.S. Dollar was supported by better jobs and housing data, and a rise in U.S. Treasury yields.

Data showed that the number of Americans filing new claims for unemployment benefits dropped to a 19-month low last week, pointing to a tightening labor market, though a shortage of workers could keep the pace of hiring moderate in October.

Additionally, U.S. home sales also surged to an eight-month high in September, but higher prices as supply remains tight are squeezing first-time buyers out of the housing market.

Daily AUD/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum may be getting ready to shift to the downside with the formation of a closing price reversal top.

The confirmation of the closing price reversal top won’t change the main trend to down, but it could trigger the start of a 2 to 3 day correction. A trade through .7458 will confirm the chart pattern.

A move through .7547 will negate the closing price reversal top and signal a resumption of the uptrend.

The minor trend is also up. A trade through .7379 will change the minor trend to down. This will confirm the shift in momentum.

On the upside, the key resistance is the long-term 50% level at .7499.

On the downside, support is layered at .7463 and .7435. This is followed by a support cluster at .7379 and a retracement zone at .7358 to .7314.

Daily Swing Chart Technical Forecast

The direction of the AUD/USD on Friday is likely to be determined by trader reaction to .7463.

Bullish Scenario

A sustained move over .7463 will indicate the presence of buyers. If this move generates enough upside momentum then look for a surge into .7499. Overcoming this level will indicate the buying is getting stronger with .7547 the next target.

Taking out .7547 will negate the closing price reversal top and signal a resumption of the uptrend. This could trigger an acceleration into a pair of main tops at .7599 and .7617.

Bearish Scenario

A sustained move under .7463 will signal the presence of sellers. The first downside target is .7435. This 50% level is a potential trigger point for an acceleration into the support cluster at .7379, followed by the short-term retracement zone at .7358 to .7314. Since the main trend is up, buyers are likely to show up on a test of this area.

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

E-mini S&P 500 Index (ES) Futures Technical Analysis – In Position to Challenge 4539.50 Early Friday

December E-mini S&P 500 Index futures are inching higher late in the session on Thursday after recovering an earlier loss. The selling was fueled by a drop in IBM shares following the release of its quarterly report late Wednesday. The potential impact of supply chain disruptions and labor shortages on profits also weighed on prices.

In the cash market, the benchmark S&P 500 Index edged lower from the opening, but was just about 10 points short of its early September record, but a rise in mega-cap growth companies helped turn the index higher late in the session.

At 19:28 GMT, December E-mini S&P 500 Index futures are trading 4535.75, up 7.75 or +0.17%.

In economic news, data showed the number of Americans filing new claims for unemployment benefits dropped to a 19-month low last week, pointing to a tightening labor market, though a shortage of workers could keep the pace of hiring moderate in October.

Daily December E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade thorough yesterday’s high at 4532.25 signaled a resumption of the uptrend. A move through 4539.50 will reaffirm the uptrend and set a new contract high.

A trade through 4260.00 will change the main trend to down. This is highly unlikely, but the index is currently inside the window of time for a closing price reversal top. This won’t change the main trend to down, but if confirmed, it could trigger the start of a 2 to 3 day correction.

The short-term range is 4539.50 to 4260.00. The index is currently trading on the strong side of its retracement zone at 4432.75 to 4399.75. This is new support.

Daily Forecast

The direction of the December E-mini S&P 500 Index into the close on Thursday will be determined by trader reaction to 4528.00.

Bullish Scenario

A sustained move over 4528.00 will indicate the presence of buyers. If this move creates enough upside momentum then look for a test of the record high at 4539.50 early in the session on Friday.

Bearish Scenario

A close under 4528.00 will signal the presence of sellers. This will also form a potentially bearish closing price reversal top. If confirmed on Friday, then this could trigger the start of a 2 to 3 day correction.

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

EUR/USD Mid-Session Technical Analysis for October 21, 2021

The Euro is trading lower on Thursday after the European Central Bank’s economic outlook suggested it won’t be able to raise rates for years to come, given the correlation between global bond markets, rate increases in the U.K., U.S. and other major countries have also pushed Euro Zone rates higher and money markets have started to price a full ECB rate hike next year.

At 14:30 GMT, the EUR/USD is trading 1.1644, down 0.0007 or -0.06%.

The U.S. Dollar also strengthened against the Euro on some light safe-haven buying as risk sentiment soured. The greenback also moved higher as the Federal Reserve moved closer to tapering in November.

In economic news, the number of Americans filing new claims for unemployment benefits dropped to a 19-month low last week, pointing to a tightening labor market, though a shortage of workers could keep the pace of hiring moderate in October.

Daily EUR/USD

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart, however, momentum has shifted to the upside.

A trade through 1.1755 will change the main trend to up. A move through 1.1524 will signal a resumption of the downtrend.

The minor trend is up. This is controlling the momentum. A trade through 1.1669 will indicate the buying is getting stronger. A trade through 1.1572 will change the minor trend to down.

The short-term range is 1.1755 to 1.1524. The EUR/USD is currently straddling its pivot at 1.1640.

On the downside, potential pivot support is 1.1621 and 1.1597.

The main range is 1.1909 to 1.1524. If the minor uptrend resumes then its retracement zone at 1.1717 to 1.1762 will become the next upside target.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD into the close on Thursday is likely to be determined by trader reaction to 1.1640.

Bullish Scenario

A sustained move over 1.1640 will indicate the presence of buyers. The first potential upside target is 1.1669. Taking out this level could trigger an acceleration into the short-term 50% level at 1.1717.

Bearish Scenario

A sustained move under 1.1640 will signal the presence of sellers. This could trigger a labored break into the pair of pivots at 1.1621 and 1.1597.

If 1.1597 fails as support then look for the selling to extend into the minor bottom at 1.1572.

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

Price of Gold Fundamental Daily Forecast – ‘Risk-Off’ Session Could Pressure Prices if Dollar Rebounds

Gold futures are edging higher on Thursday with traders focusing on Treasury yields and the U.S. Dollar as both suggest a shift in investor sentiment. Further supporting the notion of a “risk-off” day is an early dip in U.S. stock indexes in the pre-market session and a rise in the Japanese Yen.

At 10:48 GMT, December Comex gold futures are trading $1786.30, up $1.40 or +0.08%.

If today is a “risk-off” day then gold traders could be in for a confusing session because Treasury yields could drop and the dollar could rise on safe-haven buying. A drop in yields would lower the opportunity cost of holding gold, proving it some support. However, a rise in the greenback due to safe-haven buying would likely cap gains in the dollar-denominated asset.

Safe-haven demand for the Japanese Yen could also draw the money that could come out of the stock market as investors pay back loans to Japanese banks for the carry trade. This could mean that little, if any, cash flows back into gold. Remember, gold is an investment, not a safe-haven.

Why do we think we can see a shift in risk sentiment on Thursday? Because of the technical closing price reversal tops in the NASDAQ Composite and Dollar/Yen, and the technical closing price bottom in 10-year Treasury notes.

What we’re not seeing is evidence of major buying of gold for protection. We’re seeing a market that is likely being capped by Thursday’s rebound in the U.S. Dollar. That’s likely to be the focus for gold traders today.

Fed Officials Attempt to Bring Some Clarity on Policy

Earlier in the week, gold was supported by the notion that the lack of clarity and conviction from the Federal Reserve on tapering and interest rates was likely to mean that high inflation would last longer than previous expected.

That idea may have been put to bed on Wednesday when two U.S. Federal Reserve officials said while the central bank would begin winding down its stimulus measures, it was too soon for interest rate hikes.

Federal Reserve Governor Randal Quarles said that while it’s time for the Fed to begin dialing down its bond-buying program, it would be “premature” to start raising interest rates in the face of high inflation that is likely to recede next year.

He also said that “I do not see the (Fed) as behind the curve” on fighting inflation. To the contrary, he said, “constraining demand now, to bring it into line with a transiently interrupted supply, would be premature.”

Quarles comments should’ve been bullish for gold but traders must’ve remembers last week’s comments from Fed official James Bullard who said the Fed should be more aggressive.

Daily Forecast

Today could be a big day for gold traders because today they will be forced to show their hand. They are either going to commit to the bullish narrative that inflation fears are providing support, or they are going to react to a turnaround in the U.S. Dollar that could put pressure on prices. Time is beginning to run out for the bulls as we move closer to the November 2-3 Fed meeting.

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

Natural Gas Price Fundamental Daily Forecast – Weather Remains Main Factor to Watch Ahead of EIA Report

Natural gas futures are edging lower early Thursday shortly before the release of the U.S. government’s weekly storage report later in the session. Ahead of the report, traders are looking for a build of a little less than triple digits. Last week, the report surprised to the downside, revealing a lower-than-expected 81 Bcf injection into stocks for the week ending October 8.

At 09:06 GMT, December natural gas futures are trading $5.400, down $0.047 or -0.86%.

Report Results Could Be Downplayed Because of Weather Concerns

Analysts at Bespoke Weather Services, predict a build of 90 Bcf, but also warned about potential downside risks to the figure. They believe that even a slightly lower injection would prevent it from being looser week/week.

“The main factor to watch, moving forward, will be the weather,” the forecaster said. “Our ideas would bring more pressure to prices, favoring a November warmer skew, for now.”

EBW Analytics Group agreed that a potential weather shift remains the “critical wildcard” for the Lower 48.

“The 16- to 30-day forecast shows heating demand nearly even with 30-year normal and 65 gas-heating degree days above year-ago levels,” EBW said. “If it verifies, the forecast would likely arrest declines and could reinflate Nymex risk premiums by early to mid-November.”

US Energy Information Administration Weekly Storage Report

Natural Gas Intelligence (NGI) is reporting that analysts responding to major surveys projected a build near 90 Bcf for the week-ending October 15. Reuters polled 17 analysts, whose estimates ranged from builds of 80 Bcf to 97 Bcf, with a median injection of 90 Bcf. The average of 14 estimates in a Wall Street Journal poll also landed at a 90 Bcf injection. The median of a Bloomberg survey, in which projections ranged from 84 Bcf to 95 Bcf, was 91 Bcf. NGI modeled a 95 Bcf increase in inventories.

Daily Forecast

Traders may react to today’s storage number immediately after the report, but the focus is likely to shift quickly to the weather, especially with November right around the corner. So don’t read into the report too much.

“Currently, market positioning suggests the need for at least modest cold, or recent declines may extend to the low-to-mid $4.00/MMBtu range,” EBW analysts said. “Any significant cold shot before Thanksgiving, however, could return prices toward recent highs north of $6.00/MMBtu.”

Technically, the major support zone is $5.269 to $4.956. This area stopped the selling at $5.070 on Tuesday. If it fails to hold, prices could collapse with $3.944 a potential downside target. This would likely occur if the new forecasts for November come in warmer than normal.

On the upside, buyers would have to overtake two resistance zones at $5.591 to $5.713 and $5.832 to $6.011 before the market can make another run at its recent top at $6.593.

We could be in the “sell the rally” mode until the weather turns colder.

Oil Price Fundamental Daily Forecast – Set Up for Short-Term Correction, but Bullish Factors Remain Intact

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging lower on Thursday after giving back earlier gains on profit-taking. The price action reflects the current early session theme of lower demand for riskier assets with stocks weakening along with commodity-linked assets, while money moves into the safe-haven Japanese Yen.

At 08:20 GMT, December WTI crude oil futures are trading $82.81, down $0.61 or -0.73% and December Brent crude oil is at $84.99, down $0.83 or -0.97%.

Although the markets may be entering a short-term correction mode, they remain well-supported for further upside action over the long-run. The absence of large increases in supply from the United States or OPEC is one reason to expect higher prices. The other is expectations of strong demand from the switch to fuel oil from coal and gas by power generators amid surging prices.

US Crude, Fuel Stocks Dip, Tightening Supply as Demand Remains Strong – EIA

U.S. crude and fuel inventories tightened further last week, as supplies of gasoline hit a two-year low and inventories at the largest U.S. commercial storage hub dropped to a three-year low, the Energy Information Administration (EIA) said on Wednesday.

Crude inventories fell by 431,000 barrels in the week to October 15 to 426.5 million barrels, compared with analysts’ expectations in a Reuters poll for a 1.9 million-barrel rise.

U.S. gasoline stocks fell by a more-than-expected 5.4 million barrels in the week to 217.7 million barrels, the lowest since November 2019, the EIA said.

Distillate stockpiles, which include diesel and heating oil, fell by 3.9 million barrels, putting their stocks at their lowest levels since April 2020.

OPEC to Stay the Course

Crude oil prices have been bolstered for more than a year as supply has tightened, with the Organization of the Petroleum Exporting Countries (OPEC) maintaining a slow increase in supply rather than intervening to add more barrels to the market.

Last week, OPEC leader Saudi Arabia dismissed calls for speedier oil output increases, saying its efforts with allies were enough and protecting the oil market from the wild price swings seen in natural gas and coal markets.

OPEC and its allies have done a “remarkable” job acting as “so-called regulator of the oil market,” he said.

Daily Forecast

Crude oil could feel some light pressure on Thursday if the “risk-off” tone continues. The dollar could also recover from a week-long sell-off which could reduce foreign demand for dollar-denominated crude, at least over the short-run. But the move is not expected to last long or lead to a major change in trend. Instead, it will probably alleviate some of the upside pressure that could lead to a technically oversold market.

Additionally, futures contracts are currently in backwardation, where later-dated contracts trade at a lower price than the current contract. That encourages companies to sell oil immediately rather than keep it in storage.

It also prevents large build-ups of supply, which is bullish for crude prices.

With the longer-term trend pointing higher, the markets are likely to remain in the “buy the dip” mode for a while.

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

USD/JPY Fundamental Daily Forecast – Early Signs of ‘Risk-Off’ Sentiment Weighing on Dollar/Yen

The Dollar/Yen is trading lower on Wednesday after posting a potentially bearish technical chart pattern the previous session. Since yesterday’s rally stopped just short of the November 6, 2017 top at 114.728, the price action suggests that profit-taking is taking place after a 12 day rally.

At 07:02 GMT, the USD/JPY is trading 114.011, down 0.325 or -0.28%.

Bullish Factors:  Widening Interest Rate Differential, Carrytrade

Helping to drive the Dollar/Yen higher has been rising U.S. Treasury yields. The move has widened the interest rate differential which has made the U.S. Dollar a more attractive asset versus the Japanese Yen.

On Wednesday, the 10-year U.S. Treasury yield hovered above 1.6%, its highest point since mid-May, as strong corporate earnings boosted economic sentiment.

This trend is likely to continue over the long-run because the Federal Reserve is closer to tightening monetary policy while the Bank of Japan is still considering more stimulus. Furthermore, inflation is soaring in the United States and below the mandate in Japan. Just two reasons why the USD/JPY should remain underpinned.

Increased demand for riskier assets has also helped drive the Dollar/Yen higher because of the carry trade. With demand for stocks rising, traders are borrowing at extremely low rates in Japan, selling the Yen and buying the dollar to invest in U.S. equities.

Also on Wednesday, the benchmark S&P 500 Index saw its sixth straight day of gains, amid the upbeat earnings reports.

Daily Forecast

A technical closing price reversal bottom in December 10-year Treasury notes on Wednesday is an early sign that interest rates could dip lower over the next 2 to 3 days.

Meanwhile, a technical closing price reversal top in the USD/JPY is a sign that profit-taking could lead to a 2 to 3 day correction of the current rally.

Since the move in the USD/JPY mirrored the chart pattern in Treasury futures, we can clearly see that the direction of yields is controlling the movement in the Dollar/Yen.

We’re also seeing early weakness in the U.S. stock market likely in reaction to the news that China Evergrande shares briefly dropped more than 10% in the opening trade on Thursday, after a deal to sell some of its assets to Hopson Development Holdings fell through.

Right now were looking at the possibility of a “risk-off” day which could put pressure on the USD/JPY throughout the session on Thursday.

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

AUD/USD and NZD/USD Fundamental Daily Forecast – Rally Stalls on Profit-Taking after Sixteen Session Run

The Australian and New Zealand Dollars are trading lower Thursday after giving up earlier gains. The price action suggests profit-taking and position-squaring may be taking place after both currencies hit multi-month highs. Technical factors could also be weighing on the Aussie and the Kiwi amid fresh concerns over overbought conditions.

At 05:13 GMT, the AUD/USD is trading .7507, down 0.0009 or -0.12% and the NZD/USD is at .7193, down 0.0008 or -0.11%.

Early Session Strength Before Reversal to Downside

Earlier in the session, the Australian and New Zealand Dollars advanced to new multi-month highs against the greenback as local benchmark yields climbed, the U.S. Dollar inched lower, and investor optimism drove demand for risk-friendly currencies.

The kiwi “retains upward momentum,” wrote analysts at Westpac in a note, since, “The U.S. Dollar has retreated, global risk sentiment is rising, and NZ-U.S. yield spreads have risen significantly.”

As for the Australian Dollar “we remain torn between the near-term positives of super strong commodity prices and a weakening U.S. Dollar, and the medium term view that global strength will slow sharply into Q4,” they said.

Australia Business Conditions at Record High:  National Australia Bank

Australia’s business conditions rose to a record high in the second quarter, while confidence eased slightly, survey data from the National Australia Bank (NAB) showed on Thursday.

The business conditions index rose strongly by 12 points to a record 32 points in the second quarter. Meanwhile, the business confidence index dropped to 17 from 19 in the preceding quarter.

Business conditions were still in negative territory in the third quarter of 2020, and now, three quarters later, they were at a record high, a testament to how rapid the recovery has been from last year’s recession, Alan Oster, NAB group chief economist, said. “A pleasing aspect of the survey is how broad-based the strength in conditions and confidence was – whether you look by industry or by state they are all above average, and in many cases well above,” said Oster.

The survey was conducted between May 18 and June 10, so responses only partly capture any impacts from the Victorian lockdown that effectively started on May 28.

Daily Forecast

The Aussie and Kiwi have rallied from one-month lows hit a few weeks ago when fears about slowing economic growth were high on investors’ minds, driving a rush for safe havens, especially the U.S. Dollar.

This line of thought has since reversed as investors rushed into commodities and other riskier assets, dampening the U.S. Dollar’s safe-haven appeal. Additionally, New Zealand Dollar traders have increased bets on more aggressive rate hikes by the Reserve Bank (RBNZ) while Fed policy is still unclear. Meanwhile, traders are also betting the Reserve Bank of Australia (RBA) will raise rates before 2024, a move they continue to deny will take place.

What we’re looking at today is simple profit-taking, in my opinion.

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

U.S. Dollar Index (DX) Futures Technical Analysis – Due for Reversal Bottom; Could Stengthen Over 93.580

The U.S. Dollar is inching lower early Thursday in a low volume, tight-trading range session. Helping to cap gains and pressure prices this week is improving risk sentiment, which zapped the greenback of recent upside momentum built from expectations the Federal Reserve would tighten monetary policy.

At 04:10 GMT, December U.S. Dollar Index futures are trading 93.500, down 0.035 or -0.04%.

Traders have fully-priced the start of a Fed tapering in November and have moved up the date of the first Fed rate hike to July 2022, but apparently that isn’t fast enough, causing investors to increase bets on more aggressive action by other major central banks.

That includes the Bank of England (BoE). The British Pound is rising against the U.S. Dollar on firming perceptions the BoE will raise interest rates as soon as next month to curb inflation, despite softer-than-expected U.K. price data on Wednesday.

The consensus shows that traders are betting on a November BoE rate hike and another perhaps in December. The BoE wants to be aggressive as inflation could get out of control given a severe labor shortage.

Essentially, we are likely to see rate hikes in several countries to curb inflation before the Fed makes it move, which is weighing on the investment appeal of the U.S. Dollar.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down on Tuesday when sellers took out the swing bottom at 93.680.

A move through 94.570 will change the main trend to up. This is highly unlikely but today marks the seventh day down from the last main top, which puts the index inside the window of time for a potentially bullish closing price reversal bottom.

The minor trend is also down. A trade through 94.175 will change the minor trend to up. This will shift momentum to the upside.

The short-term range is 92.970 to 94.570. The index is currently trading on the weak side of its retracement zone at 93.580 to 93.770, making the area potential resistance.

On the downside, potential support is a series of retracement levels at 93.430, 93.255, 93.160 and 92.940.

Daily Swing Chart Technical Forecast

The direction of the December U.S. Dollar Index on Thursday is likely to be determined by trader reaction to the short-term Fibonacci level at 93.580.

Bearish Scenario

A sustained move under 93.580 will indicate the presence of sellers. The first downside target is a 50% level at 93.430.

Taking out 93.430 will indicate the selling pressure is getting stronger. This could trigger an acceleration into the loose support cluster at 93.255 to 93.160.

Bearish Scenario

A sustained move over 93.580 will signal the presence of buyers. If this creates enough upside momentum then look for a move into 93.770. Overcoming this level could drive the index into 94.175 over the near-term.

Side Notes

The dollar index is down seven sessions from its last main top. A close over 93.535 will form a closing price reversal bottom. This won’t change the main trend to up, but if confirmed, it could trigger the start of a 2 to 3 day counter-trend rally.

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

E-mini S&P 500 Index (ES) Futures Technical Analysis – Vertical Rise Makes It Vulnerable to Reversal Top

December E-mini S&P 500 Index futures are trading higher late in the session on Wednesday after the cash market close as investors celebrated better than expected third-quarter earnings from U.S. companies. The benchmark index is currently trading within striking distance of its all-time high recorded in early September.

At 10:32 GMT, December E-mini S&P 500 Index futures are trading 4524.50, up 13.25 or +0.29%.

With just about 14% of S&P 500 third-quarter reports in, analysts were expecting earnings for the benchmark index to rise 33% from the year-ago quarter. More than 85% of those who reported beat expectations, according to the latest data from Refinitiv.

Daily December E-mini S&P 500 Index

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through the intraday high at 4532.25 will signal a resumption of the uptrend. A move through 4539.50 will reaffirm the uptrend.

The main trend will change to down on a trade through the nearest main bottom at 4260.00. This is highly unlikely but due to the prolonged move up in terms of price and time, today’s session will end with the index inside the window of time for a closing price reversal top.

A closing price reversal top won’t change the trend to down, but if confirmed, it could trigger the start of a minimum 2 to 3 day pullback or 50% correction of the current rally.

The short-term range is 4539.50 to 4260.00. The index is trading on the strong side of its retracement zone at 4432.75 to 4399.75, making it new support.

Daily Swing Chart Technical Forecast

The late session momentum suggests there will be follow-through buying during Thursday’s pre-market session. The market is close enough to the all-time high at 4539.50 that traders should take a shot at it early in the session.

There is some risk to the downside, however, because of the 14 to 20 day cycle. During this time period, we could see a higher-high, lower close. If the index takes out the previous day’s high and especially the record top then is going to have to remain positive for the session.

Turning lower for the day will be an early sign that the selling is greater than the buying at current price levels.

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

Price of Gold Fundamental Daily Forecast – Specs Betting Fed is Moving Too Slowly to Fight Inflation Rise

Gold futures are trading higher late in the session on Wednesday in reaction to a slight dip in U.S. Treasury yields and continued weakness in the U.S. Dollar. Lower yields tend to lower the opportunity cost of holding non-yielding bullion and a drop in the greenback tends to drive up foreign demand for the dollar-denominated asset.

At 19:24 GMT, December Comex gold is trading $1785.20, up $14.70 or +0.83%.

That compact explanation for why gold is trading higher today is usually reserved for the long-run. Day-to-day, it’s hard to tell why gold is moving higher, but stringing a few days together could produce a reasonable rally over the near-term.

I don’t believe the analysts who say gold is rallying on worries over rising inflation and supply chain issues because if inflation were to get out of control, the Federal Reserve or any other central bank for that matter would pull in its stimulus at a faster-than-expected pace and raise interest rates sooner-than-currently expected and more aggressively. These moves would stop the gold rally in its tracks.

I do believe that the strength in gold is reflecting a new concern that the Fed is not moving fast enough to stem the potential impact of high inflation. It is possible that policymakers have miscalculated the strength and duration of the current inflationary environment, after all, they did eliminate the term “transitory” in their September monetary policy statement with at least one choosing to call it “episodic”

The difference in the two beliefs has to do with the expected duration of the current rally in gold.

If gold traders really believed that inflation would get out of control, prices would be soaring. Speculators would be buying highs, taking out resistance and knocking out the buy stops set by weak shorts. Instead, the current rally is being fueled by short-covering and speculators buying dips.

Speculative buyers coming in on the dips are helping to fuel the short-covering, but until the buying is strong enough to overcome the traders selling rallies, the market is likely to remain inside a volatile trading range.

So I have to conclude that aggressive speculative buyers are coming in on the dips because they believe the Fed is moving too slow in the tightening process, and sellers are coming in to stop the rallies because they believe that U.S. policymakers will eventually become more aggressive with its tapering and rate hikes.

Eventually something has to give, but we may not know that until the Fed releases its monetary policy statement following its November 2-3 meeting.

At that time, if the Fed comes across as hawkish, prices will fall on new shorting pressure and liquidation by speculative longs. If the Fed is dovish then buyers will continue to chip away at resistance and weak shorts will aggressive cover.

Essentially, clarity and conviction from the Fed regarding the pace of tapering and rate hikes will determine the next major move in gold.

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