Silver Daily Forecast – Silver Slides to 10-Week Low

Silver has lost ground for a fourth straight day. Currently, silver is trading at $17.12, down $0.64 or 3.65% the day.

Silver Approaching $17

It has been a rough week for silver. The metal is down 7.5% and is on track to post its worst week since October 2016. Silver is struggling to stay above the symbolic 17.00 level, which has held since mid-December.

As a precious metal, silver can be considered a safe-haven asset. At the same time, it also has use as an industrial component, and this aspect has sent silver prices sharply lower. For example, silver is found in photovoltaic (PV), which is a key component in the manufacture of solar panels. China boasts the largest PV silver market in the world, and the coronavirus resulted in many PV factories having to close. South Korea, another industrial hub for silver, has been hit hard by the coronavirus, as the country’s economic activity has been sapped.

Will Fed Trim Rates in Response to Corona?

Only a few weeks, ago, Federal Reserve policymakers were confidently indicating to the markets that they did not anticipate lowering rates in 2020. However, the devastating economic consequences of the coronavirus may cause the Fed to reconsider this stance.

On Thursday, Chicago Fed President Charles Evans said that the Federal Reserve was paying “close attention” to the outbreak and said that “policymakers must commit to provide extraordinary accommodation in order to meet their mandate.” If the coronavirus spreads in the U.S., the Fed may be forced to cut interest rates.

 

Silver Technical Analysis

As silver falls, support levels continues to break. The 200-day EMA is situated at 17.10 and is located at the candlesticks. This is immediately followed by the round number of 17.00. Below, we find support at 16.30, which is protecting the 16.00 level. Above, we have resistance at 17.50, with the 50-EMA at 17.81. This is followed by the key line of 18.00.

 

Crude Daily Forecast – Crude Slips Below $45 as Demand Slides

Crude prices continue to lose ground this week. Currently, U.S. crude oil is trading at $45.20, down $0.95 or 2.09% on the day. Brent crude oil is trading at $50.26, down $1.15 or 2.24%.

Crude Slips to 13-Month Low

As the coronavirus continues to spread, the economic fallout to the global economy is growing. This has been the catalyst behind a plunge in oil prices. Crude has declined by 14.7% this week and briefly fell below the $45 level earlier on Friday. This is its lowest level since January 2018. With analysts warning that things could worsen before they improve, oil prices will likely remain under downward pressure.

The bleak economic situation in China, with much of the industrial sector paralyzed, has led to a sharp reduction in demand for oil. China is the world’s second-largest oil producer, and the deteriorating situation is taking its toll on Saudi Arabia, which is China’s top supplier of oil. Starting in March, Saudi Arabia will sharply reduce its oil exports to China, which currently stands at about 2 million barrels per day (bpd). Analysts say that this amount could be cut significantly, perhaps as much as 300,000 bdp.  Chinese refineries have sharply cut refinery runs, leading to a growing oversupply of crude on global markets.

Technical Analysis

WTI/USD continues to fall and break below support levels this week. The pair tested support at 45.50 earlier on Friday and this line could break before the end of the trading week. The next support level is at 43.55.

On the upside, there is resistance at 47.50, followed by resistance at .$49.50, which is just below the symbolic $50 level.

Silver Daily Forecast – Silver Slide Resumes, is $17.00 Next?

Silver has lost ground on Thursday. Currently, silver is trading at $17.83, down $0.15 or 0.92% the day. 

Silver Falls on Demand Fears

Silver continues to show sharp swings. After gaining 4.3% last week, silver has slumped this week, surrendering most of these gains. The metal has benefited from its status as a safe-haven asset, but it is also used as an industrial metal. This means that the economic chaos caused by the coronavirus has fueled concerns that weaker growth will reduce the demand for silver. For example, one industrial use of silver is in photovoltaic (PV), which is a key component in the manufacture of solar panels. China boasts the largest PV silver market in the world, and the coronavirus resulted in many PV factories having to close. The virus has also spread to South Korea, another industrial hub for silver.

Meanwhile, gold prices continue to move higher, as the safe-haven asset has attracted investors who are becoming increasingly alarmed as the coronavirus has now spread to Europe and the first confirmed case has been reported in the United States. Earlier in the week, gold touched $1689, its highest level since January 2013. It appears that the metal is poised to break above the lofty $1700 level.

 

Silver Technical Analysis

Silver continues to lose ground this week. The key line of 18.00 has switched to a resistance role, but it is a weak line. Above, we have resistance at 18.60, followed by 19.20.

On the downside, the 50-day EMA is situated at 17.81 and is touching the candlesticks. The next support line is at 17.50. The 200-EMA is at 17.10, followed immediately by the round number of 17.00.

Crude Daily Forecast – Crude Slips Below $48 on Demand Concerns

Crude prices have fallen for a fifth straight day.  Currently, U.S. crude oil is trading at $47.40, down $1.03 or 2.1% on the day. Brent crude oil is trading at $52.14, down $1.22 or 2.27%.

Crude Sags as Coronavirus Spreads

It has been a dismal week for crude, which has plummeted 10.8 percent. Investor risk apprehension continues to rise as the coronavirus outbreak has spread to Western Europe. Italy has reported 11 fatalities, while France confirmed its second victim on Wednesday. Spain, Austria and Switzerland have also reported coronavirus cases. It appears to be only a case of time before the virus reaches the United States.

The coronavirus is taking a toll on the global economy, with the disruption to supply chains and the plunge in the global tourism industry. The drop in economic activity has also weighed on the demand for crude, dragging prices lower. Crude fell to a daily low of 47.35 on Thursday, its lowest level since January 2018. With analysts warning that things could worsen before they improve, oil prices will likely remain under downward pressure.

EIA Shows Unexpectedly Small Surplus

The U.S. Department of Energy crude inventory report indicated a small surplus of 0.5 million barrels. This was well below the forecast of 2.3 million barrels. This reading was almost a repeat of the gain of 0.4 million a week earlier. Although the surplus was smaller than expected, the reading failed to stem crude’s slide.

Technical Analysis

WTI/USD continues to fall and break below support levels this week. The pair tested 47.50 earlier on Thursday and this line remains fluid. Below, there is support at 45.50. On the upside, there is resistance at 49.50, followed by resistance at 52.50.

WTI/USD 1-Day Chart

Silver Sliding on Global Growth Fears

Silver is slightly lower on Wednesday, after plunging over 3.3% on Tuesday. Currently, silver is trading at $17.90, down $0.10 or 0.56% the day. 

Silver Falls as Industrial Use Declines

After a strong run in which silver gained over 6 percent, the metal has reversed directions and coughed up most of those gains, falling close to 4 percent. Silver benefited from its position as a safe-haven asset, but the metal is also used as an industrial metal. One key industrial use is in photovoltaic (PV, which is a key component in the manufacture of solar panels. and China boasts the largest PV silver market in the world, and the coronavirus resulted in many PV factories having to close. The virus has also spread to South Korea, another industrial hub for silver.

Coronavirus Reaches Western Europe

It has been a dreadful week for crude, which has slumped 7.1 percent. Investor risk apprehension continues to rise as the coronavirus outbreak has spread to Western Europe. Italy has reported 11 fatalities, while France confirmed its second victim on Wednesday. Spain, Austria and Switzerland have also reported coronavirus cases. The European Union had considered imposing border controls but has decided that such a severe move would do little to contain the virus.

Silver Technical Analysis

Silver continues to lose ground this week. The pair tested the symbolic line of 18.00 on Tuesday and has dropped to a daily low of 17.79 in the Wednesday session. Below, the 50-day EMA is situated at 17.81 and is touching the candlesticks. The next support line is at 17.50. The 200-EMA is at 17.11, followed immediately by the round number of 17.00.

On the upside, 18.00 is an immediate resistance line. Above, we have resistance at 18.60, followed by 19.20.

Crude Oil Forecast – Crude Slips to 13-Month Low on Coronavirus Fears

In the European session, U.S. crude oil is trading at $48.97, down $0.89 or 1.80% on the day. Brent crude oil is trading at $53.66, down $1.30 or 2.36%.

Coronavirus Jitters Sends Crude Below 50.00

It has been a dreadful week for crude, which has slumped 7.1 percent. Investor risk apprehension continues to rise as the coronavirus outbreak has spread to Western Europe. Italy has reported 11 fatalities, while France confirmed its second victim on Wednesday. Spain, Austria and Switzerland have also reported coronavirus cases. The European Union had considered imposing border controls, but has decided that such a severe move would do little to contain the virus.

The outbreak has caused significant economic damage in China and its ramifications are being felt worldwide, such as the toll on the global tourism industry. With the disruption to economic activity, the demand for crude has also dropped, dragging prices lower. Crude fell to a daily low of 48.81 on Wednesday, its lowest level since January 2018. With analysts warning that things could worsen before they improve, oil prices will likely remain under downward pressure.

Meanwhile, OPEC members are watching nervously as oil prices continue to fall. OPEC is keenly interested in cutting production to stabilize prices, but it needs Russia on board if the cut to output will lift oil prices. However, Russia does not appear in any rush to lower production. With OPEC+ oil ministers meeting next week in Vienna, we could see significant movement in oil prices, dependent on whether an agreement is reached to cut output.

Technical Analysis

WTI/USD broke below the key 50.00 level on Tuesday and continues to lose ground. There is support at 47.50, followed by support at 45.50. On the upside, there is immediate resistance at 49.50, followed by resistance at 52.50 and 54.00. This is followed by the 50-day EMA at 54.30.

WTI/USD 1-Day Chart
WTI/USD 1-Day Chart

Silver Hits Wall, Pulls Back Towards $18 Level

Silver has reversed directions on Tuesday and posted slight losses. Currently, silver is trading at $18.34, down $0.28 or 1.56% the day. 

Silver Rally Fizzles Out

Silver has been on an excellent run, climbing 6 percent since February 12. However, the rally has stopped on Tuesday, as silver prices are down 1.5 percent. Silver appears to have been overbought, as investors were only too happy to get their hands on precious metals, such as gold and silver. These safe-haven assets have benefited from growing alarm over the coronavirus, which has sapped risk appetite. This trend was clearly apparent on Monday. Silver touched a daily high of 18.90, its highest level since September 2, while gold prices touched a daily high of 1689.38, its highest level since 2013. Despite the pullback in silver on Tuesday, the trend for silver remains upwards, and I expect a rebound sometime during the week.

Italy Reports Coronavirus Deaths

Investors remain jittery over the coronavirus, which now has an official name – COVID-2019. The virus has now reached western Europe, with Italy confirming two fatalities from the outbreak. This will likely mean more confirmed cases in western Europe since they are no border controls within the European Union. With no signs that the virus will be contained anytime soon, we could see the silver and gold rallies continue this week.

Silver Technical Analysis

After an impressive rally, silver has retraced and is again putting pressure on the symbolic 18.00 level. Below, the 50-day EMA is currently situated at 17.84, followed by support at 17.50. Next is the 200-EMA, at 17.11.

On the upside, 18.60 is an immediate resistance line, followed by 19.20. Above, the lofty level of 20.00 has held in resistance since September 2016.

Crude Oil Forecast – Crude Takes Pause After Slide

In the Tuesday session, U.S. crude oil is trading at $50.98, down $0.16 or 0.32% on the day. Brent crude oil is unchanged, trading at $56.00.

Are OPEC and Russia Parting Ways?

The China coronavirus has caused havoc in China’s economy and is threatening the global economy as well. China is the world’s number two consumer of oil, so it’s no surprise that demand has plunged, resulting in crude prices falling heavily early in 2020. This has left oil producers with a major headache, as they face falling oil revenues. OPEC has proposed cutting production in order to shore up sagging demand, but not without Russia onboard.

However, Russia, who has increased production year after year, is clearly hesitant to cut production. A showdown between OPEC and Russia could occur when oil ministers from OPEC and non-OPEC meet on March 5-6 in Vienna. Although Saudi Arabia has denied there is a rift with Russia, most analysts aren’t buying it. According to Manish Raj, chief financial officer at Velandera Energy, “the tussle between OPEC and Russia raises substantial doubt about continuation of production cuts and therefore a return to a heavily oversupplied market.”

Bottom line? I expect to see some intense jockeying between OPEC and Russia in the days ahead of the upcoming meeting. If Saudi Arabia is able to drag Russia on board the proposal to cut output, we could see a sharp rebound in crude prices.

Technical Analysis

WTI/USD is hovering around the 50.90 level, which was tested in support on Monday and again in the European session on Tuesday. Below, there is strong support just below the symbolic 50-level, at 49.50. This is followed by support at 47.50. On the upside, there is resistance at 52.50, followed by resistance at 54.00. The 50-day EMA is situated at 54.56.

WTICOUSD daily chart

Silver Daily Forecast – Silver Gains Ground, Closing in on $19.00

Silver has posted slight gains in the Monday session. Currently, silver is trading at $18.76, up $0.28 or 1.56% the day. 

Corona Jitters Boost Silver, Gold

Silver enjoyed an excellent week, gaining 4.2 percent. This marked silver’s strongest week since the final week in August, when silver jumped 5.3 percent.

The coronavirus outbreak continues to spread, raising fears that the virus will reach even more countries. Earlier on Monday, Italy reported 200 confirmed cases, the largest number of cases outside of Asia. Italy’s health officials have imposed severe restrictions, which include limiting transport and the quarantine of individuals in affected areas. With the virus reaching Italy, there is concern that the outbreak could quickly spread throughout western Europe, as the Schengen Area, which covers 26 countries, allows for borderless travel. The European Union has said that it will not impose travel bans, but that could change if other European countries report coronavirus cases.

World Health Organization Director-General Tedros Adhanom Ghebreyesus weighed in on the crisis on Saturday, noting that the increase in cases in Italy, South Korea and Iran “is also a matter of concern and how the virus is now spreading to other parts of the world.”

Investors have reacted by snapping up precious metals, which act as safe-haven assets. Earlier on Monday, silver touched a daily high of 18.90, its highest level since September 2. Gold prices touched a daily high of 1689.38, its highest level since 2013. With no signs of the virus will be contained anytime soon, we could see the silver and gold rallies continue this week.

 

Silver Technical Analysis

As silver continues to rally, the line of 19.00 finds itself under strong pressure. This line could be tested as early as Tuesday. Above, the lofty level of 20.00 has held in resistance since September 2016.

On the downside, 18.60 is an immediate support line. Below, there is support at the symbolic 18.00 level. Next, the 50-day EMA is currently situated at 17.81, followed by support at 17.50.

Crude Oil Forecast – Crude Slides as Coronavirus Spreads

In the European session, U.S. crude oil is trading at $51.16, down $2.02 or 3.83% on the day. Brent crude oil is trading at $56.12, down $2.29 or 3.95% on the day.

Markets Jittery as Coronavirus Reaches Italy

The China coronavirus is weighing on the markets, as the outbreak continues to spread. With growing fears that the virus is becoming a pandemic, investors are nervous that crude demand will continue to fall and drag prices lower.

Earlier on Monday, Italy reported that 200 confirmed cases, the largest number of cases outside of Asia. Italy’s health officials have imposed severe restrictions, which include limiting transport and the quarantine of individuals in affected areas. There is extreme concern that that virus could quickly spread throughout western Europe, as the Schengen Area, which covers 26 countries, allows for borderless travel. The European Union has said that it will not impose travel bans, but that could change if other European countries report coronavirus cases.

World Health Organization Director-General Tedros Adhanom Ghebreyesus said on Saturday that there was still a chance to contain the virus beyond China, “but the window of opportunity is narrowing.” Tedrus added that the increase in cases in Italy, South Korea and Iran “is also a matter of concern and how the virus is now spreading to other parts of the world.”

Technical Analysis

WTI/USD is down sharply on Monday, putting strong pressure on the 50.90 line. This line could be tested later in the Monday session. Below, there is support at the symbolic 50.00 level, followed by support at 49.30.

On the upside, there is resistance at 52.50, followed by resistance at 54.00. Above, the 50-day EMA is situated at 54.71.

WTICOUSD Daily Chart

Yuan Rebounds After Coronavirus Fears Push Currency to Seven-Week Low

Triggering partial rebounds in the Australian dollar, South Korea won, Thai baht, and Indonesian rupiah. However, the yuan’s rebound may be short-lived if Chinese health authorities can’t adequately contain the domestic or international spread of coronavirus, an epidemic that the World Health Organization is now calling COVID-19.

If you’re concerned by the yuan’s recent bout of extreme volatility, you — as a small business owner or independent investor — may want to develop a hedging strategy to reduce foreign exchange (FX) risk. In particular, FX forwards are popular amongst traders or business owners who are looking to minimize their exposure to currency risk by locking in a favorable exchange rate.

What’s Next for The Yuan Against Major Currencies?

The yuan’s most recent decline, which passed key resistance thresholds to eventually bottom out at 6.866 yuan against the U.S. dollar, was broadly underpinned by two key events:

  • The first cause was the sudden surge in COVID-19 deaths and diagnosed cases in mainland China. At the time, domestic health authority reports indicated that the rate of new COVID-19 cases had peaked. When conflicting news dropped on already jittery investors, the subsequent market pullback created significant downward trading pressure on the yuan.
  • The second cause was the unexpectedly low levels of factory activity recorded in key industrial provinces. Although a considerable number of manufacturing plants have come back online, chronic labor force shortages and COVID-19 quarantine and prevention procedures continue to disrupt the resumption of full-scale business and manufacturing output.

At this point in time, any further forecasts regarding the value of the yuan are contingent on unreliable assumptions about the current scale of the COVID-19 outbreak and the success of China’s ongoing control efforts. Moreover, the yuan’s price will also be impacted by a range of conventional value modifiers, including China’s upcoming Foreign Direct Investment report and the success of the phase one trade deal recently signed between Beijing and Washington.

How Could You Have Benefited from the Yuan’s Dip?

If you’ve been keeping a close eye on USD/CNY trading charts, you may have viewed the yuan’s recent dip as a low-cost opportunity to lock in FX forwards or increase your foreign currency holdings. If the worst of the COVID-19 epidemic is behind us, then currency holders will likely see a sharp narrowing in the USD/CNY trading range.

Despite the ongoing local correction, technical analysis of the USD/CNY indicates that the dominant bull trend remains intact for the long-term. To restart channel breakout momentum, the pair will need to advance through a measured move and establish long-term support above 7.024. At the time of writing, the USD/CNY has punched above the psychologically important 7.000 range and closed at 7.033 yuan to the dollar.

Unfortunately, the yuan’s rebound may be showing signs of slowdown. Yesterday, the USD/CNY even dipped below key resistance around 6.700. Fortunately for chartists, buyback momentum for the region’s key trading pair remained firm, with surging trading volume leading a near-term rally past key technical indicators in the 6.740-6.750 trading range.

If the yuan manages to maintain bullish sentiment, it will likely secure comparable trading pair gains against other major currencies, including the Euro, Pound Sterling, and Australian Dollar. Given the strong long-term prospects of China’s equity markets, foreign exchange speculators and independent currency traders largely signaled “strong buy” during the dip, leading to a surge in low-cost yuan holdings.

Remember, technical prospects for a strengthening yuan are heavily dependent on the credibility of Chinese reports pertaining to the COVID-19 outbreak. China’s state health authorities have already been accused of lying about the situation in Hubei Province and misreporting COVID-19 case numbers. As of the time of writing, 72,438 COVID-19 cases have been recorded in China, resulting in 1,869 deaths.

Two Ways Businesses Hedge Against the Yuan’s Volatility When Trading in China

When assessed through the lens of a portfolio manager or commercial business owner, the yuan’s higher than usual volatility poses significant challenges from a currency risk perspective. For businesses that operate/invest in China or frequently convert between major yuan trading pairs, there are two main ways to mitigate currency risk.

1. Utilize FX Instruments to Directly Hedge Currency Risk

Given the appropriate expertise, FX trading instruments give investors or business owners a tremendous amount of flexibility to quickly adjust FX holdings and account for future currency risk. If your objective is to maximize the exchange rate conversion for future cash flow from the Chinese market, you can use FX forwards or spot trading contracts to lock in advantageous exchange rates.

2. Build a Portfolio Around Hedged Assets

Investing in hedged assets, such as hedged mutual funds or hedged exchange-traded funds, is one of the simplest methods of minimizing international or domestic currency risk. Unfortunately, because of their relative simplicity, hedged assets can be a sub-optimal option for currency risk management. Higher expense ratios and a general lack of versatility are the main downsides to using hedged assets. For the most part, business owners tend to have the most difficulty developing a portfolio-based hedging strategy. This is because pre-hedged indices or sector-specific benchmarks are rarely able to simulate China’s trillion-dollar business operations or currency trading markets.

Key Takeaway: Prepare for Future Yuan Volatility

Despite the yuan’s recent rebound, coronavirus-induced volatility is expected to continue affecting Chinese markets for at least the next six months. Implementing an FX risk management strategy will not only limit your exposure to future downward movements in the yuan, it will also give you the means to quickly adjust your FX contracts or currency holdings to benefit from time-sensitive rebounds in key yuan trading pairs.

Crude Oil Forecast – Crude Retreats After Touching 4-Week High

Crude oil is slightly lower on Friday. Currently, U.S. crude oil is trading at $53.15, down $0.54 or 1.01% on the day. Brent crude oil is trading at $58.28, down $0.76 or 1.32% on the day. In economic news, the U.S. Department of Energy crude inventories report indicated a negligible gain of 0.4 million barrels, well off the forecast of 3.3 million barrels.

China, OPEC Under Scrutiny

There are two key factors which are having a major effect on oil prices. The first is the coronavirus outbreak, which has caused havoc in the Chinese economy and also poses a risk to the global economy. The virus continues to weigh heavily on investor sentiment. Given that China is the world’s second-largest consumer of oil, the turmoil in China has weighed heavily on oil prices. Analysts are projecting that China’s GDP will fall sharply in the first quarter of 2020, and this will translate into less demand for crude, which means downward pressure on prices.

The second factor is whether OPEC will manage to push through a production cut. Saudi Arabia, the kingpin of OPEC, has led the charge for a cut in order to lift sagging oil prices. However, OPEC needs the support of Russia, a major oil producer. Russia has not yet responded to OPEC’s proposal, but analysts expect the matter to be resolved at a meeting on March 6 of OPEC and non-OPEC oil ministers. The outcome of the meeting could well have a significant effect on the movement of crude – if the Russians agree and the cut is implemented, prices would stabilize or even increase. However, if Moscow balks and the proposal falls by the wayside, we can expect crude prices to continue falling.

Technical Analysis

The trend for WTI/USD remains upward, although U.S. crude has retreated on Friday. The round number of 53.00 is under pressure in support and was tested in the Asian session. Below, there is support at 50.90, which is protecting the symbolic 50.00 level. This is followed by support at 49.30.

On the upside, there is resistance at 54.50, with the 50-day EMA situated at 54.84. A breach of this line would aim for the 200-day EMA, which is located at 56.67.

Silver Poised for Strongest Week Since August

Silver is almost unchanged in the Friday session. Currently, silver is trading at $18.36, down $0.13 or 0.38% the day. 

Gold Rally Lifts Silver Prices

It has been an excellent week for silver, as the metal has gained an impressive 4.5% this week. This is shaping up to be silver’s strongest week since the last week in August, when silver jumped 5.3%.

The coronavirus, which shows no signs of being contained, continues to chill investor risk appetite. The outbreak has caused havoc in the Chinese economy, and this week’s warning from Apple that it would fall short of its revenue forecast due to the disruption of its Chinese production facilities. The disruption to supply-chains is also affecting other multinationals with operations in China.

Nervous investors have responded by snapping up precious metals, with gold prices gaining 3.1% this week. In Friday’s Asian session, gold touched a daily high of 1636.59, its highest level since March 2013. The gold rally has dragged silver with it, as silver prices are at their highest since January 8.

Fed Calls Coronavirus Global Risk

The Federal Reserve minutes, released earlier this week, took note of the coronavirus outbreak. Policymakers highlighted the significant risk posed by the coronavirus, stating that “the threat of the coronavirus, in addition to its human toll, had emerged as a new risk to the global growth outlook, which participants agreed warranted close watching.” Policymakers also said that the outbreak has dampened investor sentiment. This warning from the Fed underscores the threat that coronavirus poses to the global economy, which will likely put upward pressure on silver prices until the outbreak is contained.

Silver Technical Analysis

This week’s silver rally distance has seen the metal put more distance between itself and the key 18.00 level. The resistance line of 18.60 is under strong pressure and could be tested on Friday. This would be a significant development, as this line was last tested in resistance in late September.

On the downside, we find support at the 18.00 line. Below, the 50-day EMA is currently situated at 17.79, followed by support at 17.50.

Silver Daily Forecast – Silver Takes a Breather After Strong Rally

Silver is almost unchanged in the Thursday session. Currently, silver is trading at $18.36, down $0.06 or 0.38% the day. 

Risk Aversion Lifts Silver

It has been an excellent week for silver, as the metal has gained 3.7%. On Wednesday, silver touched 18.46, its highest level since January 8. A key catalyst for this week’s rally was a warning from Apple that its first-quarter sales revenue would be lower than the initial forecast. Apple said that the coronavirus had hampered the delivery of iPhones from its factories in China.

The supply-chain disruptions to Apple’s operations in China are also affecting other multinationals that have set up shop in China, which will mean shortages in goods manufactured in China. This will likely have a chilling effect on risk appetite, which is good news for safe-haven assets such as silver. Gold has also benefited from the coronavirus crisis, as gold prices broke above the psychologically important $1600 level earlier in the week, for the first time since 2013.

Fed Concerned About Coronavirus

The Federal Reserve minutes, which were released on Wednesday, indicated that policymakers are cautiously confident that they can maintain current interest rate levels in 2020. At the same time, the minutes highlighted the significant risk posed by the coronavirus, stating that “the threat of the coronavirus, in addition to its human toll, had emerged as a new risk to the global growth outlook, which participants agreed warranted close watching.” Policymakers also said that the outbreak has dampened investor sentiment. This warning from the Fed underscores the threat that coronavirus poses to the global economy, which will likely put upward pressure on silver prices until the outbreak is contained.

Silver Technical Analysis

Silver has managed to put some distance between itself and the 18.00 level, which is providing immediate support. Below, the 50-day EMA is currently situated at 17.74, followed by support at 17.50. The 200-day EMA follows at 17.04, just above support at the round number of 17.00. On the upside, there is resistance at 18.60, followed by resistance at 19.20.

Crude Oil Forecast – U.S. Crude Pauses After Punching Above $53

Crude oil is trading sideways on Thursday. Currently, U.S. crude oil is trading at $53.37, down $0.08 or 0.16% on the day. Brent crude oil is trading at $58.88, down $0.19 or 0.35% on the day. In economic news, the Energy Information Administration (EIA) inventories report will be released at 16:00 GMT, with an estimate of a surplus of 3.3 million barrels. A surplus of this magnitude or larger will likely put downward pressure on U.S. crude.

Inventory Surplus Weighing on Crude

According to the American Petroleum Institute (API) weekly inventories report, U.S. crude stocks rose by 4.1 million barrels, above the forecast of 2.5 million. Next up is the official inventory report of the Energy Information Administration (EIA) later in the day. Last week, the EIA report surprised investors with a huge surplus of 7.5 million barrels, crushing the estimate of 3.1 million. The upcoming release is expected to show a gain of 3.3 million, another indication of a large surplus of global oil supplies, which is weighing on prices.

Fed Notes Risk of Coronavirus

The Federal Reserve minutes were released at 19:00 GMT on Wednesday. The minutes reaffirmed that Fed policymakers are cautiously confident that they can maintain current interest rate levels in 2020. At the same time, the minutes highlighted the significant risk posed by the coronavirus, stating that “the threat of the coronavirus, in addition to its human toll, had emerged as a new risk to the global growth outlook, which participants agreed warranted close watching.” Policymakers also said that the outbreak has dampened investor sentiment. This warning from the Fed underscores the threat that coronavirus poses to the global economy, which could well push crude prices lower in the coming weeks.

Technical Analysis

With U.S. crude gaining ground on Wednesday, the round number of 53.00 has switched to a support level. It is a weak line that could see action on Thursday. Next, there is support at 50.90, which is protecting the symbolic 50.00 level. Below, we find support at 49.30.

On the upside, there is resistance at 54.50, with the 50-day EMA situated at 54.92. A breach of this line would aim for the 200-day EMA, which is located at 56.43.

Crude Oil Forecast – Crude Rises as U.S. Slaps Sanctions on Russian Oil Giant

Crude oil has posted slight gains on Wednesday. Currently, U.S. crude oil is trading at $52.93, up $0.84 or 1.60% on the day. Brent crude oil is trading at $58.88, up $1.22 or 2.12% on the day. In economic news, the American Petroleum Institute (API) weekly inventories report will be released at 21:30 GMT, with an estimate of a surplus of 3.3 million barrels. This will be followed by the Energy Information Administration (EIA) inventories report, which also has an estimate of a surplus of 3.3 million barrels.

U.S. Sanctions Boost Oil Prices

Oil prices have moved higher after the U.S. announced new sanctions on a Swiss subsidiary of Russian oil giant Rosneft for assisting Venezuela evade U.S. sanctions on its oil exports. The move is aimed at ramping up the pressure on Venezuelan President Maduro, whom the U.S. accuses of running an oppressive regime which has caused millions of Venezuelans to flee the country.  The move has reduced global oil supplies and lifted oil prices. U.S crude prices touched a high of 53.03 earlier on Wednesday, its highest level since January 31.

Will OPEC Cuts Get off the Ground?

OPEC has been pushing hard for further production cuts in order to reduce supplies and boost prices. An advisory committee has proposed cutting supplies by 600,000 barrels per day, but OPEC is reluctant to implement the plan without Russia’s support. For its part, Russia has stayed mum, saying it is studying the proposal. Oil ministers of OPEC and non-OPEC countries will meet on March 6 and unless oil prices move higher, there will be strong pressure on the ministers to agree to a reduction in production.

Technical Analysis

There is support for WTI/USD at 51.50. This is followed by support at the key line of 50.00. On the upside, 53.00 was tested in resistance earlier in the day and is under strong pressure. This is followed by resistance at 54.50, with the 50-day EMA at 54.94.

Silver Climbs to 5-Week High, is $19 Next?

Silver has posted slight gains on Wednesday. Currently, silver is trading at $18.33, up $0.12 or 0.70% the day. Silver prices have jumped 3.5% this week, as jittery investors have boosted safe-haven assets such as silver.

Silver Rally Continues After Apple Warning

Silver is up for a fifth straight day and has touched a daily high of $18.39, its highest level since January 7. Silver prices stormed past the symbolic $18.00 level on Tuesday, for the first time since February 3. It was a similar story for gold, which crossed above the psychologically important $1600 level on Tuesday, the first time that has occurred since January 8.

Investor risk aversion has climbed this week, following Apple’s warning letter to the markets that its Q1 sales will be lower than the initial forecast. Apple said that the coronavirus had hampered the delivery of iPhones from its factories in China. The company tried to put a brave face on the announcement, saying that “this disruption to our business is only temporary” and that outside of China, demand for the company’s products remains strong.

However, investors are painfully aware that the havoc caused to Apple’s supply chains is also being felt by other multinationals located in China, including the major automotive companies. With some 60 million Chinese under quarantine, it’s clear that the massive closures of factories and shops will have a chilling effect on goods produced in China, which should be bullish for silver prices.

 

Silver Technical Analysis

Silver has managed to put some distance between itself and the 18.00 level, which is providing immediate support. Below, the 50-day EMA is currently situated at 17.72, followed by support at 17.50. On the upside, we find resistance lines at 18.60 and 19.20.

Japan’s Economy is Feeling the Chills from Coronavirus

As the coronavirus continues to preoccupy the financial markets, the ramifications of the outbreak are being felt worldwide. Those countries with extensive commercial links with China are facing the growing possibility that the virus will cause extensive damage to their economies. Pacific countries such as Australia and Japan are scrambling to deal with the outbreak, with no indications that Chinese authorities will be able to contain the virus anytime soon.

Japan’s economy has been lukewarm, and the coronavirus is putting a severe strain on some key sectors of the economy. The Japanese tourist industry relies heavily on Chinese tourists, which make up some 30 percent of all visitors to Japan. As a result of the virus, China has banned overseas group tours and Japan has barred entry to tourists from the two provinces most affected by the outbreak, Zhenjiang and Hubei.

These severe travel restrictions could not have occurred at a worse time, as the period of the Chinese Lunar New Year (between February and March) is a peak travel time. The loss of over a million Chinese tourists has taken a toll on Japan’s services sector, with restaurants, retail stores and other establishments reporting a sharp drop in business. The dramatic scenes of the Princess Diamond, a cruise ship which has been detained in Yokohama since many passengers have the virus, are likely to deter many potential tourists from visiting Japan. Analysts estimate that the economic toll on the tourist industry will reach $1.8 billion.

Coronavirus has also disrupted supply chains for major Japanese companies, particularly in the auto industry. Toyota, Honda and Mazda have all been forced to close down their Chinese plants due to the outbreak, with workers barred from reporting to work. The outbreak is expected to significantly lower China’s GDP in 2020 and this will have a chilling effect on Japan’s critical export sector.

The grim news coming out of China is also putting pressure on the Japanese yen. USD/JPY has dipped 1.3% in February and the yen is likely to weaken as the extent of the outbreak’s toll on Japan’s economy becomes clearer.

Crude Oil Forecast – Crude Prices Steady Despite Forecasts of Less Oil Demand

Crude oil remains steady on Friday. Currently, U.S. crude oil is trading at $51.46, down $0.05 or 0.12% on the day. Brent crude oil is trading at $56.37, down $0.04 or 0.11% on the day.

IEA, OPEC Cuts Oil Demand Forecasts

On Wednesday, OPEC lowered its outlook for global oil demand growth in 2020 to 0.99 million barrels per day. This was down sharply from 1.22 million from the previous month’s estimate. In a pessimistic report, OPEC noted that “the impact of the Coronavirus outbreak on China’s economy has added to the uncertainties surrounding global economic growth in 2020, and by extension global oil demand growth in 2020.”

The OPEC revised forecast was echoed again on Thursday, as the International Energy Agency (IEA) also lowered its 2020 forecast for growth in oil demand. The IEA revised downward its estimate to 825,000 barrels a day (bpd), down from the previous forecast of 1.19 million bpd. Like the OPEC report, the IEA blamed the China coronavirus for the lower forecast. Even more significant, demand for crude is expected to decline in Q1 of 2020 by 435,000 bpd, compared to Q1 a year earlier. This would mark the first quarterly contraction in over a decade.

Given the wide expectations for lower demand, why are crude prices not falling even further? One reason is that investors feel that there is a strong chance that the OPEC initiative to cut production will be implemented. OPEC needs Russia on board for the proposal to succeed, but so far Russia has not responded.

Technical Analysis

We continue to see support for WTI/USD at 51.00. Below, there is support at the key 50.00 level, which was tested earlier this week. Next, there is a support line at 49.00, which has held since January 2019. On the upside, 52.00 remains a weak resistance line, followed by resistance at 53.00.

Silver Steady Ahead of U.S. Retail Sales

Silver is steady in Friday trade. Currently, silver is trading at $17.69, up $0.07 or 0.42% the day.

Consumer Inflation Dips, Retail Sales Next

Silver showed a muted response to the January U.S. consumer inflation reports, which were within expectations. Still, there is concern over the persistent low levels of inflation. The headline release dipped to 0.1%, its lowest level in five months. Although the Federal Reserve continues to signal that it has no plans to trim interest rates, policymakers will have to consider a cut if inflation remains barely above the zero level.

We’ll get a look at January retail sales on Friday at 13:30 GMT. The indicator is expected to remain unchanged at 0.3%. However, core retail sales, which posted a strong gain of 0.7% in December, is forecast to fall to 0.3%. Any unexpected readings could trigger some movement in silver prices.

Powell Signals No Rate Cuts Are Imminent

On Wednesday Powell outlined to the Senate Banking Committee his strategy in case of a financial crisis. Powell said that the Fed had two tools to fight a recession – quantitative easing, which involves large purchases of assets, and forward guidance, which means communicating with the markets about the likely future course of interest rate policy. Powell said that he believes that the Fed would use both these tools “aggressively should the need arise to do so”. Under Powell’s leadership, the Fed cut rates three times last year to snuff out any recessionary trends in the economy, but with rates currently at a range of 1.50-1.75%, there isn’t much more room to keep cutting.

 

Silver Technical Analysis

Silver continues to trade in a narrow range between 17.50 and 18.00. The round number of 18.00 continues to show resilience as a resistance line. Above, we find resistance at 18.60. On the downside, the 50-day EMA is currently situated at 17.64 and is touching the candlesticks. 17.50 remains a weak support line. Below, there is support at the round number of 17.00, followed by the 200-EMA line at 16.99.