Natural Gas Price Prediction – Prices Drop Ahead of Inventory Report

Natural gas prices moved lower on Wednesday breaking down ahead of Thursday’s inventory report. Expectations are for a 23 Bcf draw in stockpiles according to survey provider Estimize. US natural gas consumption is expected to decline year over year in 2020 according to the EIA. The weather is expected to be warmer than normal throughout most of the United States for the next 2-weeks according to NOAA.

Technical Analysis

Natural gas prices broke down on Wednesday falling nearly 4%, and poised to test target support near an upward sloping trend line that comes in near 2.68. Resistance is seen near the 10-day moving average at 2.84. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 21, just above the oversold trigger level of 20. Medium-term momentum has flip-flopped and is poised to turn negative as the MACD (moving average convergence divergence) is poised to generate a crossover sell signal.

The EIA Expects Consumption to Fall

EIA expects that total U.S. consumption of natural gas will average 83.7 billion cubic feet per day in 2020, down 1.7% from 2019. The decline in total U.S. consumption reflects less heating demand in early 2020, contributing to residential demand in 2020 averaging 13.2 Bcf/d and commercial demand in 2020 averaging 8.8 Bcf. EIA forecasts industrial consumption will average 22.5 Bcf/d in 2020, down 0.6 Bcf/d from 2019 as a result of reduced manufacturing activity.

Gold Price Prediction – Prices Rise as the Dollar Continues to Slide

Gold prices rebounded for a second consecutive trading session after recapturing the 200-day moving average. The dollar index closed at a 31-month low paving the way for higher gold prices. The US Beige book was darker than expected as regions in the US show no growth. ADP private payrolls came in softer than expected but failed to weigh on US yields.

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Technical analysis

Gold prices rebounded for a second consecutive trading session adding to the gains above support near the 10-day moving average at 1,820 and then the 200-day moving average at 1,801 and then the July lows at 1,756.  Resistance is seen near the former breakdown level at 1,851. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. The current reading on the fast stochastic is 31, up from 18, which reflects accelerating positive momentum. Medium-term momentum remains negative but is decelerating as the MACD (moving average convergence divergence) histogram prints in the red with a rising trajectory which points to consolidation.

ADP Private Payrolls Rise Less than Expected

Private companies added 307,000 jobs in November below the 475,000 expected. The October figure was revised higher to 404,000. This was the smallest gain since July’s 216,000. The revision added 39,000 to the original estimate from October, making the November miss not as bad as it appears. This comes ahead of Friday’s payroll report. The Labor Department on Friday is expected to report that the economy in November added 440,000 jobs, down from the 638,000 in October. Private payrolls are estimated to grow by 590,000.

Gold & the USDX: Correlations

It’s crunch time for gold and the U.S. Dollar Index (USDX), as they find themselves at a crossroads. As of Wednesday, the USDX is holding its lows but wants to move up, thus invalidating its breakdown. And gold? Well, gold did gain a bit today, but it’s essentially jumping up in an elevator that’s moving down – it just doesn’t have enough steam to break out.

While it’s been the traditional view that when the US Dollar declines, gold increases in price, we find that’s not always the case when comparing historical patterns. And just to watch the price of gold itself when making a buying decision is not enough. One needs to pay attention to the price of gold in relation to moves in the USDX – that helps to indicate the bottom.

Let’s pay attention to and examine what gold does when the USDX moves either up or down.

ChartDescription automatically generated

Yesterday we saw the first daily close below the September low. This means that the breakdown is not confirmed, and if the USDX closes below this level also today and tomorrow, it will be. However, at the moment of writing these words, the USDX is trying to rally back up – if it is successful, gold would be likely to plunge.

Still, to be precise, since gold just managed to rally above the declining resistance line, it might have enough momentum to reach the September low (at about $1,850) before turning south once again.

The breakdown in the USDX is not confirmed and it could be invalidated any hour now, but… What if it’s not? What if – despite invalidation being likely and the USDX moving up – what we’ve seen in the last couple of months was not the broad bottom in the USD Index, and the latter is going to decline from here?

These are important questions. First of all, if the above is indeed the case, it won’t mean that technical analysis became useless or less useful. It would mean that a different part of history is likely to be repeated to a certain extent, and not the ones that I featured and referred to previously.

ChartDescription automatically generated

The above wouldn’t invalidate the very bullish implications of the long-term breakout in the USDX in 2015.

So, what would be likely to happen if the USDX declines in the next few days?

Chart, histogramDescription automatically generated

In this case, it seems likely to me that the USDX would repeat its 2017 – 2018 decline to some extent. The starting points of the declines (horizontal red line) as well as the final high of the biggest correction are quite similar. The difference is that the correction was now smaller than it was in 2017.

Since back in 2018, the USDX’s bottom was at about 1.618 Fibonacci extension of the size of the correction, we could expect something similar to happen this time. Applying the above to the current situation would give us the proximity of the 90 level as the downside target.

But would gold soar in this case? Well, if the early 2018 pattern was being repeated, then let’s check what happened to precious metals and gold stocks at that time.

In short, they moved just a little higher after the USDX’s breakdown. We marked the moment when the U.S. currency broke below its previous (2017) bottom with a vertical line, so that you can easily see what gold, silver, and GDX were doing at that time. They were just before a major top. The bearish action that followed in the short term was particularly visible in case of the miners.

Consequently, even if the USD Index is to decline further from here (and – again – the breakdown could be invalidated shortly), then the implications are not particularly bullish for the precious metals market.

If you’d like to read more details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.

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

Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Sunshine Profits: Effective Investment through Diligence & Care

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All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits’ associates only. As such, it may prove wrong and be subject to change without notice. Opinions and analyses are based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are deemed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski’s, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Silver Price Forecast – Silver Markets Stalling

Silver markets have gone back and forth during the trading session on Wednesday as we are testing the 50 day EMA. This is obviously a widely followed indicator, so it should not be a huge surprise that we are sitting here. Furthermore, we are right at the $24 level which is essentially in the middle of the overall consolidation, and furthermore we have seen a massive move to the upside on Monday that people will be looking to digest the gains from. Ultimately, I think a short-term pullback is very likely.

SILVER Video 03.12.20

Having said that, the US dollar is on its back foot, and that should continue to boost the value of the silver market as well as other commodities. I think buying on the dips continues to work and people are starting to build up a bit of a potential long-term position. Ultimately, if we can break above the top of the candlestick for the trading session on Wednesday, that also sends this market higher but keep in mind that the next couple of days could be a bit noisy due to the fact that the jobs number comes out on Friday. Between now and then, markets might be a bit quiet but as the EUR/USD pair has broken the massive resistance barrier at the 1.20 level, that suggests that currency moves alone could drive silver higher.

Underneath, the 200 day EMA sits just below the $22 level which is the bottom of the overall consolidation range, so I think in general this is likely to continue to offer a bit of a “floor” in the market going forward. Furthermore, the 38.2% Fibonacci retracement level is in this general vicinity.

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

Crude Oil Price Forecast – Oil Bounces After Rumored OPEC Progress

WTI Crude Oil

The West Texas Intermediate Crude Oil market initially pulled back a bit during the trading session on Wednesday but has rallied despite the fact that there has been less than stellar gasoline builds in the United States. This is because there are rumors flying around that OPEC is making a certain amount of progress in the talks when it comes to production cuts. If that is going to be the case, then it is likely that this market could continue to go higher. All things being equal, the market continues to find buyers underneath and I do believe that we will try to make a move towards the $50 level.

Crude Oil Video 03.12.20

Brent

Brent markets have rallied quite significantly during the trading session as well, as the $47.50 level has offered support, as it was previous resistance. Ultimately, this is a market that should continue to go looking towards the $50 level. The $50 level is of course a large, round, psychologically significant figure, but I think that we probably have more strength going higher and above that level. All things being equal, I think that it is obvious that the “reflation trade” is in fact in full effect, and that should continue to drive oil prices higher. Over the next couple of days, we could see a little bit of volatility, but longer-term I do believe that people will be buying regardless. The 50 day EMA is getting ready to cross above the 200 day EMA, which longer-term traders will be paying attention to.

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

Oil Gets Back Above The $45 Level As Crude Inventories Decline

Oil Video 02.12.20.

Crude Inventories Decrease By 0.7 Million Barrels

EIA has just released its Weekly Petroleum Status Report which indicated that crude inventories decreased by 0.7 million barrels. The recent API Crude Oil Stock Change report indicated that crude inventories increased by 4.1 million but the market typically relies on EIA data.

Gasoline inventories grew by 3.5 million barrels, and it looks like demand for gasoline is set to remain weak in the last month of this year. Distillate fuel inventories increased by 3.2 million barrels.

Interestingly, U.S. domestic oil production grew from 11 million barrels per day (bpd) to 11.1 million bpd. The potential growth of U.S. domestic oil production is one of the main questions for oil traders at the end of this year.

Previously, most analysts, including EIA, believed that U.S. oil production will remain close to 11 million bpd. However, oil managed to get to the $45 level and may move even higher, pushing U.S. producers to increase oil output in order to boost their revenues.

U.S. production has just made its first step away from the 11 million bpd level, but it may gain more momentum in case oil remains above the $45 level.

Norway Will Increase Its Oil Production In 2021

While OPEC+ continues negotiations about the potential extension of current oil production cuts, Norway announced that its production cuts would expire at the end of this year.

Norway is not a member of OPEC+, and its government-mandated production cuts were voluntary.

However, Norway’s decision may complicate OPEC+ negotiations as many OPEC+ members are not happy to watch how their market share is decreasing while others increase their oil production.

The market clearly needs a three-month extension of current production cuts, but even a decision to gradually increase production may also provide some support to prices.

OPEC+ must do everything to avoid a complete failure of current negotiations which may lead to a brutal sell-off. OPEC+ members will resume their negotiations tomorrow, and oil will likely be very volatile during the remaining trading sessions of this week.

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

Natural Gas Price Forecast – Natural Gas Continue to Consolidate

Natural gas markets initially tried to rally during the trading session on Wednesday but pulled back a bit from this downtrend line that I have drawn on the chart. The $3.00 level above is significant resistance, and we have pulled back from that area that was a previous gap. Ultimately, I do think that the 50 day EMA flattening out suggests that the market is trying to figure out where to go next, but at this point in time if we can break above the $3.00 level, we would then go looking to fill that gap. Ultimately, I think that the market not only break that level but goes higher.

NATGAS Video 03.12.20

On pullbacks at this point in time natural gas should be relatively well supported due to the fact that the cold weather is certainly still going to be an issue in January, but we have a few more weeks before we see some type of selloff due to the cyclicality trade. At this point, I think that we could make an explosive move to the upside and go looking towards the $3.40 level. Whether or not we can break above there is a completely different question. As far as selling is concerned, I simply have no interest in doing so anytime soon, but once we start trading the spring contracts, I would be more than willing to do so.

This contract currently is the January contract, which is probably one of the highest demand months out of the year. That being said, one drag on demand is the fact that the economy in the United States is slowing down but the heating demand is still going to be there.

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

Gold Price Forecast – Gold Markets Sluggish But Still Look Bullish

Gold markets have rallied slightly during the trading session on Wednesday but have given back some of the extensions of gains. That being said, the market is likely to see pullbacks that will be bought into. The 200 day EMA which crossed during the previous session, so it should offer a certain amount of support. Alternately, if we break above the top of the candlestick for the trading session on Wednesday, that could be a buying opportunity as well. Keep in mind that the US dollar continues to see massive amounts of selling, and that could continue to put upward pressure on gold.

Gold Price Predictions Video 03.12.20

Furthermore, there seems to be the massive “reflation trade” out there, and therefore I think it is very likely that we will continue to see commodities go higher. Ultimately, if the US dollar continues to fall from here, it is very likely that commodities in general will get a bit of a boost. The next major resistance level is closer to the $1850 level, and that of course we have the 50 day EMA above there. All things been equal though, this is a market that probably has to spend a certain amount of time building up a bit of a base in order to go long again.

Longer-term, I believe that gold has a bright future, due to the fact that central banks around the world continue to loosen monetary policy and it is not just the Federal Reserve at this point. Underneath, I believe that the recent lows will continue to be supportive, as we have seen such a nice three bar reversal at this point in time.

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

Silver Price Daily Forecast – Silver Pulls Back After Yesterday’s Rally

Silver Video 02.12.20.

Silver Tests The Support At The 20 EMA

Silver failed to settle above the 50 EMA at $24.10 and declined towards the 20 EMA at $23.80 while the U.S. dollar was mostly flat against a broad basket of currencies.

The U.S. Dollar Index received strong support near 91.15 and tested the nearest resistance level at 91.50. However, the U.S. Dollar Index failed to gain sufficient upside momentum and declined towards 91.30.

If the U.S. Dollar Index manages to settle below the support at 91.15, it will gain downside momentum and move towards the next support at 91 which will be bullish for silver.

Gold is currently trying to settle above the nearest resistance level at $1815. If this attempt is successful, gold will move towards the next resistance at the 20 EMA at $1840 which will be bullish for silver and other precious metals.

Gold/silver ratio made an attempt to settle below the support at 75.50 but did not manage to gain sufficient downside momentum and returned back to 76.50. If gold/silver ratio declines below the support at 75.50, silver will get a boost.

Interestingly, the restart of U.S. stimulus negotiations failed to provide much support to silver and gold price today. At this point, it looks like precious metals traders are skeptical about near-term chances for a deal between Republicans and Democrats.

Technical Analysis

silver december 2 2020

Silver lost upside momentum after yesterday’s rally and is currently testing the support at the 20 EMA at $23.80. If silver manages to settle below this level, it will head towards the next support level at $23.30.

In case silver settles below the support at $23.30, it will gain downside momentum and head towards the next support level at $22.90.

On the upside, silver needs to get above the resistance at the 50 EMA at $24.10 to have a chance to develop additional upside momentum. The 50 EMA level continues to serve as a major obstacle on the way up, and silver will likely need more bullish catalysts to settle above this level.

If silver gets above the 50 EMA, it will head towards the next resistance level near $24.60. A move above $24.60 will open the way to the test of the resistance at $25.00.

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

Natural Gas Price Fundamental Daily Forecast – Flipping Weather Forecasts Holding Prices Rangebound

Natural gas futures are trading higher on Wednesday, but the market remains rangebound with an upside bias as traders continue to digest the latest weather models, which have flipped from bearish to bullish and back to bearish since Sunday.

Despite the shaky forecasts, the market remains supported by strong export demand and dropping supply, but that potentially bullish news hasn’t been able to encourage enough of the bigger players to abandon the short-side of the market to fuel a breakout to the upside.

At 13:08 GMT, January natural gas futures are trading $2.919, up $0.039 or +1.35%.

After a promising start on Tuesday due to forecasts calling for cold weather, the market turned lower as the models flipped to the bearish side. The news was just enough to limit gains with prices still well supported by traders betting on longer-term cold patterns. Cash prices also turned lower despite continued strong demand on the East Coast and the country’s mid-session.

Colder temperatures are still expected this week, which could provide support for cash prices. If this occurs then look for the futures market to be supported also.

EBW Analytics Group said that despite the bearish turn in the latest weather models, space heating demand in Weeks 1-3 still is expected to remain “far above recent levels.”

However, the folks at Bespoke Weather Services aren’t as optimistic about the upside potential. They don’t have the same confidence in the projected cold being teased in the long-range forecast given the unexpected shift in the latest European data.

They still see the potential for cold late in the 11-15-day outlook based on the European and American models, but still feel “less emphatically.” Furthermore, Bespoke sees some warmer weather before then. However, they are having trouble trusting the models until they see consistency in the forecasts.

According to Natural Gas Intelligence (NGI), Bespoke’s confidence is back below average. Their outlook for now sees the first half of December as variable and near the five-year and 10-year normal.

“But if the warmer shift is more than just a hiccup, downside risks increase,” Bespoke said.

Daily Forecast

The price action this week suggests uncertainty about the latest forecasts with traders holding prices inside a trading range.

Our work indicates resistance at $2.930 to $2.995 and a potential trigger point for an acceleration to the upside at $3.002 with $3.081 to $3.182 the next likely upside target.

On the downside, the support is $2.829 to $2.788.

The current setup suggests counter-trend buyers could come in on a test of $2.829 to $2.788, or aggressive trend traders could come in on a move through $3.002.

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

Daily Gold News: Wednesday, Dec. 2 – Gold Back Above $1,800

The gold futures contract gained 2.13% on Tuesday, as it retraced its recent declines. On Monday the market has extended a short-term downtrend following breaking below the recent local lows along the price level of $1,850. Three weeks ago gold sold off 5% in one day after global financial markets’ euphoria rally in reaction to Covid-19 Pfizer’s vaccine news release. Last week there has been a breakdown below the support level of $1,850, as we can see on the daily chart ( the chart includes today’s intraday data ):

Gold price is 0.3% higher this morning, as it is retracing some more of its recent decline. What about the other precious metals? Silver gained 6.63% on Tuesday and today it is 0.2% lower. Platinum gained 3.93% and today it is 0.6% higher. Palladium gained 0.99% yesterday and today it’s 0.4% lower. So precious metals are mixed this morning .

Yesterday’s ISM Manufacturing PMI release has been slightly lower than expected at 57.5. Today we will get ADP Non-Farm Employment Change , Beige Book releases and some more Fed talk including Fed Chair Powell’s Testimony.

The markets will wait for Friday’s monthly jobs data release .

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days:

Wednesday, December 2

  • 8:15 a.m. U.S. – ADP Non-Farm Employment Change
  • 9:00 a.m. U.S. – FOMC Member Quarles Speech
  • 10:00 a.m. U.S. – Fed Chair Powell Testimony
  • 1:00 p.m. U.S. – FOMC Member Williams Speech
  • 2:00 p.m. U.S. – Beige Book
  • 8:45 p.m. China – Caixin Services PMI

Thursday, December 3

  • 8:30 a.m. U.S. – Unemployment Claims
  • 9:45 a.m. U.S. – Final Services PMI
  • 10:00 a.m. U.S. – ISM Services PMI

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

Paul Rejczak
Stock Selection Strategist
Sunshine Profits: Analysis. Care. Profits.

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Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Oil Price Fundamental Daily Forecast – OPEC+ Worries, Surprise API Build Weighing on Prices

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are putting in a mixed, but slightly better performance on Wednesday shortly before the release of the government’s inventories report at 15:30 GMT.

Adding to the uncertainty in the market is the stalemate at the OPEC+ meeting that was moved from Tuesday to Thursday, giving oil ministers to hash out their differences. Meanwhile, there is some support being generated by the news that Britain became the first country to approve a COVID-19 vaccine for use, boosting hopes for a future recovery in oil demand.

At 12:00 GMT, January WTI crude oil is trading $44.34, down $0.21 or -0.47% and February Brent crude oil is at $47.35, down $0.07 or -0.15%.

The market is also recovering from an early setback fueled by a private industry report that showed a surprise build in oil inventories in the United States.

OPEC+ Update

OPEC and its allies, including Russia, postponed talks on next year’s oil output policy to Thursday from Tuesday, according to sources.

The group this year imposed production cuts of 7.7 million barrels per day (bpd) as the coronavirus pandemic hit fuel demand. It had been widely expected to roll those reductions over into January-March 2021 amid spikes in COVID-19 cases.

But the United Arab Emirates (UAE) said this week that even though it could support a rollover, it would struggle to continue with the same deep output reductions into 2021.

UK Approves COVID-19 Vaccine

Britain on Wednesday became the first western country to approve a COVID-19 vaccine, jumping ahead of the United States and mainland Europe in what may be a first step toward a return to normal life that will boost oil consumption back to pre-crisis levels.

American Petroleum Institute Weekly Inventories Report

The API reported on Tuesday a build in crude oil inventories of 4.146 million barrels for the week-ending November 27. Analysts had predicted an inventory draw of 2.358 million barrels for the week.

The API reported a build in gasoline inventories of 3.402 million barrels of gasoline for the week ending November 27 – compared to the previous week’s 1.3-million-barrel build. Analysts had expected a 2.386-million-barrel build for the week.

Distillate inventories were up by 334,000 barrels for the week, compared to last week’s 1.8-million-barrel draw, while Cushing inventories fell by 132,000 barrels.

U.S. oil production was up for the week-ending November 20, at 11.0 million bpd, according to the Energy Information Administration – 2.1 million bpd lower than the all-time high of 13.1 million bpd reached in March.

Daily Forecast

We’re seeing a slight uptick in prices because of the positive vaccine news, but the real focus is expected to be on the OPEC+ decision on Thursday so we could see a two-sided trade throughout the session.

OPEC+ is in a tough spot because it has to make a decision that presents a united front or traders will begin to think the deal won’t last and that the group will not be able to hold together in the future.

Stephen Brennock, and oil broker at PVM said market expectations were leaning towards the extension of the current tranche of cuts through the first quarter of 2021, though “full in the knowledge that anything less would trigger a brutal selling frenzy.” Some estimates call for at least a $5.00 per barrel sell-off if the new deal disappoints traders.

Later today, a report from the U.S. Energy Information Administration (EIA) is expected to show a 1.7 million drawdown in crude oil inventories.

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

Price of Gold Fundamental Daily Forecast – Shorts Covering as Fiscal Stimulus Talk Resurfaces

Gold futures are edging higher on Wednesday for a second day as tentative investors reacted to chatter over the passage of a U.S. fiscal stimulus package. Gains were likely being limited by the U.K.’s approval of the Pfizer COVID-19 vaccine.

At 09:24 GMT, February Comex gold is trading $1826.00, up $7.10 or +0.39%.

A weaker U.S. Dollar also provided support from the dollar-denominated asset earlier in the session, but since then a rebound in the greenback has helped to cap gold’s gains.

US Senator McConnell Calls for New Stimulus

Gold price rallied on Tuesday as the dollar plunged to its lowest level in more than 2-1/2 years, as investors bet on the prospect of further fiscal stimulus from the United States.

News of a proposed COVID bill sank the dollar further, as did the resumption of talks between U.S. Treasury Secretary Steve Mnuchin and House of Representatives Speaker Nancy Pelosi on Tuesday about a stimulus package.

The proposed relief bill of $908 billion would fund measures through March 31, including $228 billion in additional paycheck protection funds for hotels, restaurants and other small businesses.

The general tendency is to sell the dollar and buy gold when reports over bipartisan stimulus deals make the headlines.

Pelosi said on Tuesday Mnuchin would review both bipartisan Senate proposal as well her and Senator Charles Schumer’s COVID relief plan.

Monetary Stimulus Coming Too?

Speculation is also growing that the Federal Reserve will act to support the economy through a tough winter before vaccinations become available. That should further weigh on the dollar.

The Fed meets to set policy on December 15-16.

Fed Chairman Jerome Powell and Treasury’s Mnuchin on Tuesday also urged Congress to provide more help for small businesses amid a surging coronavirus pandemic and concern that relief from a vaccine may not arrive in time to keep them from failing.

Gains Capped as UK Secures Millions of Pfizer Vaccine Doses

The U.K. expects to have millions of doses of the Pfizer vaccine against COVID-19 available by the end of the year, Health Secretary Matt Hancock said on Wednesday shortly after the order was approved by the U.K. medicines regulator.

“We’re expecting a matter of millions of doses for the whole of the U.K. by the end of the year, and I’m purposefully not putting a figure on it, because we don’t know,” he said on BBC Radio 4.

Daily Forecast

This week’s price action suggests traders should expect choppy, two-sided price action over the near-term as bullish news about stimulus drives out the short-sellers and brings in the speculative buyers, and vaccine hopes keep the pressure on prices since success could speed up the economic recovery, dampening the need for further fiscal and monetary help.

Traders should also start watching the comments from President-elect Joe Biden since they could offer valuable guidance for traders.

On Tuesday, gold pared early losses after the New York Times reported Biden will not immediately act to remove the Phase 1 trade agreement, which President Trump inked with China.

Biden also said his priority is getting a generous aid package through Congress even before he takes office on January 20.

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

Correction on Gold and Oil Accelerates

Gold accelerates with a bullish reversal. One horizontal and one dynamic resistance are broken, time to test the 1850 USD/oz.

Brent and WTI go lower but still inside the flag.

Nasdaq continues the upswing.

DAX bounces from the lower line of the channel up.

SP500 bounces from the horizontal support.

Dollar Index collapses.

EURUSD aims significantly higher.

EURJPY surges after the Inverse Head and Shoulders pattern.

USDCAD goes deeper after breaking crucial long-term horizontal support.

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

Roller Coaster Pattern Playing out on Oil Prices

Oil prices are going up at least in the near term on recent report that Pfizer’s COVID-19 vaccine is readily available for use amid a surprise build seen in U.S oil stockpiles coupled with delayed OPEC+ talks surrounding their course of action on supply cuts.

At about 5.30 am GMT in Asia the U.S based oil contract broke below its critical support level around the $44.25/barrel, as oil traders became jittery.

However, that changed few hours later on reports that Pfizer’s COVID-19 vaccine has been approved for use in the United Kingdom, thereby restored some buying pressure not seen in Wednesday oil trading session.

At the time of writing this report the London based oil contract, Brent crude futures was trading around $47.55/barrel. Still both major benchmarks Brent crude and West Texas Intermediate futures remained far above the $40 mark.

Some hours ago, Oil bears were taking near term actions taking to account that recent data from the American Petroleum Institute revealed a 4.146-million-barrel gain for the week ending November 27. Oil experts had earlier anticipated that a 2.272-million-barrel drop.

Still, Oil traders are presently in a state of limbo has the oil cartel group delayed the all-important meeting till tomorrow where OPEC+ will decide on crude oil production cuts. The meeting was originally planned to hold on Tuesday.

In addition, oil bears are having some signs of relief in moving freely around the fragile oil market, as a major oil player, Saudi Arabia considers resigning from its role as co-chair of the group’s Joint Ministerial Monitoring Committee. Such a move has kept many oil traders second-guessing, why such a move at a time, oil prices seem to be ticking up relatively.

Such timing has kept the price volatility seen in November under check on the basis of recent price action reveals oil traders are still languishing in OPEC + meeting delay.

That said, it’s hard for such reports to dent oil bull resolve at least in the midterm, taking to account that the major headlines, hitting the market are Pfizer’s COVID-19 vaccines hitting the market this week coupled with the long-awaited U.S stimulus deal about to be agreed on in a matter of days.

Indeed, it is worth keeping an eye on such prevailing macros while the wrangling over OPEC+ production cuts continues.

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

Crude Oil Price Update – Pullback into $43.30 to $42.57 Likely to Attract New Buyers

U.S. West Texas Intermediate crude oil futures are trading lower on Wednesday after a surprise build in oil inventories in the United States and as OPEC and its allies left markets in limbo by delaying a formal meeting to decide whether to increase output in January.

Helping to offset the potentially negative events was the news that Britain has become the first country in the world to approve a vaccine for use against the coronavirus and that it will be rolled out from early next week.

At 08:14 GMT, January WTI crude oil is trading $44.44, down $0.11 or -0.25%.

In other news, late Tuesday industry data from the American Petroleum Institute showed U.S. crude inventories rose by 4.1 million barrels last week, compared with analysts’ expectations in a Reuter poll for a draw of 2.4 million barrels.

Daily January WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through $46.26 will reaffirm the uptrend. The main trend will change to down on a trade through $40.33.

The minor trend is also up. A trade through $41.26 will change the minor trend to down. This will also signal a shift in momentum.

The minor range is $40.33 to $46.26. Its 50% level at $43.30 is a potential downside target.

The main range is $34.04 to $46.26. Its retracement zone at $40.15 to $38.71 is the best support area.

Daily Swing Chart Technical Forecast

There doesn’t seem to be enough bullish news to support the market at current price levels or to encourage investors to chase prices higher. So we have concluded that prices have to pull back into the pair of 50% levels at $43.30 and $42.57 in order to attract new buyers.

If there is a move to the upside then look for it to run into resistance at $45.09. Counter-trend traders could come in on a test of this level. They are bearish traders trying to set up a minor secondary lower top.

The trend is up but your choice is to play for a pullback into $43.30 to $42.57, or a breakout over $46.43.

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

Santa has come Early for the Markets

US stocks rose broadly Tuesday, and the S&P 500 pushed toward another record high as investors focused on a bullish assortment of reflation libations. Markets also cheered when they heard Janet Yellen’s voice in an official capacity again when the former well -respected Fed Chair accepted President-elect Biden’s offer to join his economic team in the official capacity as new US Treasury Secretary.

Markets are trading off their intersession highs but remain on stimulus watch. However, caution should be exercised after all; we have had this stimulus carrot dangled in front of us before.

Still, it was one of those healthy risk-on days that may have set the market’s wheels in motion for a December to remember. The better sentiment came amid robust global manufacturing PMIs for November, notably in China, and optimism that coronavirus vaccines could soon help usher in a faster global economic recovery with the Moderna candidate applying for FDA emergency approval. Still, the cheery on top is the possibility of stimulus before year-end, helping rocket-fueled the reflationary tone to markets.

The next leg of the rotation into the Reopen trade is underway as rates move higher, a December to remember kicks off, and stimulus hopes grow. Price action overnight is yet another confirmation that folks are willing to look yonder and beyond the bounds of lockdowns (forced or self-imposed) and instead are eager to focus on a vivid post-vaccine world.

Santa has come early for the markets, and even if it is a very unusual version of consumer Christmas- lite this year, “happy days are here again ” as the world is now hoping the festive mood music never ends. Still,

I would be surprised if the move today at the Index level turns into a straight line higher for the Value/Cyclical trade. Instead, it would expect more single-stock dispersion again as investors become more selective.

The cross-currents of positive vaccine news and an improving outlook vs. slowing data and weaker sentiment kept the VIX in a 21-25 range for three weeks even as the S&P 500 tested the upper end of its recent range and the Russell 2000 surged 20% in November. The VIX fell below 21 during the Thanksgiving holiday week, but the belly (approximate 3-6-month VIX futures) has remained stable at about 25 as growth/virus risks persist.

Oil markets

With various moving parts to manage and some justifiable fatigue setting in among OPEC+ policymakers attempting to find common ground to extend historically high production curtailments, OPEC/OPEC+ process is proving to be an exceptionally delicate affair. And even if we compromise to defuse a bitter dispute over the current quota cuts, it does not bode well for the OPEC compliance cooperative in 2021.

The timing could not have been worse for OPEC+ to drop the ball given the moon shoot reflationary unfolding in what could very we be the start of a December to remember. While cross-assets are reveling to the beat of vaccine and stimulus news, oil markets are still languishing in OPEC + meeting deferment sulk.

And rubbing salt in the OPEC+ fissures, oil sold off further as US inventories balloon. Analysts penciled their Thanksgiving oil demand guesses on the wrong side of the ledger. The American Petroleum Institute reported on Tuesday a build in crude oil inventories of 4.146 million barrels for the week ending November 27 against analysts’ expectations for a draw.

Oil prices were trading down on Tuesday afternoon before the API’s data release despite daily news of Covid-19 vaccine progress, after OPEC on Monday ended its meeting without a resolution. OPEC finds itself in a slippery situation again—and make no mistake, it is compulsory for the present a united front for whatever plan it hatches. The small slip in oil price on Tuesday is only a curtain warmer of what will happen to prices should the deal fail. Indeed, it is worth keeping an eye on oil markets while the wrangling over OPEC+ production cuts continues.

Forex

The Euro

The Euro surged higher overnight on an assortment of reflation libations that rocket-fuelled the global growth upswing narrative, specifically early vaccine approvals, and US stimulus optimism. And Fed hopes came off the ropes after a weaker than expected ISM overnight.

Also, Brexit negotiations went into the ‘tunnel’? Times reporter Tom Newton-Dunn says they have, although there has not been any confirmation from other sources yet. For now, it should be treated with caution, particularly as this still does not mean the political hurdles will be overcome. What is clear is that the most decisive few days now lie ahead. On both sides, general assumptions are that a deal needs to be done by next week’s EU Summit on Dec. 11/12, so there is still room for a calamitous tumble, but a more unlikely than not.

The Pound

The Pound also caught a bid with Gilts under renewed pressure after the headlines on Brexit negotiations. Along with discussions around some additional stimulus in the US, it looks like the potential pitfalls that could have tripped up markets into year-end are all suddenly looking less of a worry.

So, after the month-end noise, EURUSD sliced through 2020 highs like a hot knife through butter. The FX insider track has the same views as last week. Namely, the market is under-invested, and the risk is a bigger move higher.
The Australian Dollar

Today, the Australian dollar is in a bit of catch-up mode after RBA Governor Lowe reiterated that “Australia has turned the corner on the economy,” speaking to the economic committee.

The AUD had failed to keep pace with other parts of G10, failing to make much progress despite a risk-on mood in stock. I suspect the escalating Australia -China trade spat is creating a touch of buyer fatigue. Yesterday, EUR-USD failed to hold above 1.20, USD-CAD was unable to break below support at 1.1920, and AUD-USD could not sustain the shift above 0.74. All three currencies weakened against the USD as a result, but while the EUR and CAD have recovered the bulk of that reversal, the AUD had languished

Asia FX

Solid manufacturing PMIs in Asia for November fusing with stimulus and vaccine optimism drive broad-based FX gains in Asia. Central banks in the region are increasingly uncomfortable with FX strength, but their caution is not unusual early in a global economic cycle. Relatively attractive yields vs. G10 suggest investment flow into local bond and equity markets will continue.

The Offshore Yuan rose to one week high after the dollar slumped to a two-year low and mainland shares climbed on hopes a vaccine and a fresh round of US stimulus will boost global growth in 2021

However, the ringgit has fallen off the pace as local traders turn a cautious eye to the OPEC quota extension meeting proceedings, which are now presenting a crater on the road instead of a minor speed bump. During the OPEC conference, tension saw the Saudi Energy minister offered to resign as co-chair of the panel at one point. Yesterday it was reported that the scheduled meeting would be pushed back to December 3 to give ministers more time to reach an agreement overproduction.

Gold Markets

Gold price pops back above USD1,800/oz as USD retreats, and while gold can go a bit higher, it still faces uphill challenges from vaccine optimism.

Gold after a series of nasty declines following enthusiasm over COVID-19 vaccines. Gold had been trading well below USD1,800/oz and came close to testing the psychological make or break for ETF concerns USD1,750/oz level. A weaker USD effectively threw a lifeline around bullion, helping it rally back from two weeks of declines.

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

Gold Price Prediction – Prices Rise Recapturing the 200-day Moving Average

Gold prices rebounded on Monday and recaptured the 200-day moving average following a softer than expected US ISM manufacturing report.  The move was temperated by a rise in US yields as riskier assets gained traction. The Dollar tumbled to fresh lows for 2020 hitting a 2.5 year low, which paved the way for higher gold prices.

Trade gold with FXTM

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Technical analysis

Gold prices rebounded on Tuesday after and recaptured the 200-day moving average after falling below this technical level for the first time since March. Short term support is seen near the 200-day moving average at 1,800 and then the July lows at 1,756.  Resistance is seen near the 10-day moving average at 1,825. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. The current reading on the fast stochastic is 18, up from 9, but still below the oversold trigger level of 20, which could foreshadow a correction. Medium-term momentum remains negative as the MACD (moving average convergence divergence) histogram prints in the red with a declining trajectory which points to lower prices.

ISM is Softer than Expected

The dollar eased which helped buoy gold following a report from the Institute for Supply Management which said that the manufacturing index fell to 57.5% in November from a 21-month high of 59.3% in the prior month. Expectations had been for the index to decline to 58%. The New Orders Index registered 65.1 percent, down 2.8 percentage points from the October reading of 67.9 percent according to the ISM. The Production Index registered 60.8 percent, a decrease of 2.2 percentage points compared to the October reading of 63 percent.

Oil Moves Below $45 While Traders Wait For OPEC+ Decision

Oil Video 01.12.20.

OPEC+ Failed To Reach Consensus And Postponed The Second Day Of The Meeting To December 3

OPEC+ decided to postpone the second day of its meeting to December 3 so oil traders will have to spend several days waiting for the final outcome.

According to recent reports, Saudi Arabia continues to push for a three-month extension of current production cuts. However, other OPEC+ members want to gradually increase oil production.

There are several issues that OPEC+ has to deal with. Demand for oil is different in various regions. While Europe is suffering from lockdowns, Asian economies continue to rebound. Not surprisingly, those suppliers who ship their oil to Asia want to increase their output.

OPEC+ did not manage to achieve full compliance with the current deal. While compliance was very strong by OPEC standards, several members like Iraq or Nigeria exceeded their quotas.

The rising production from Libya, which is exempt from the production cut deal due to the civil war, is another worrisome development for many OPEC+ members who do not want to lose their market share.

In addition, higher oil prices may boost U.S. shale oil production. Clearly, OPEC+ members do not want to subsidize recovery of their main competitor which completely distorted the marketplace in the previous decade.

OPEC+ Must Find A Way To Support The Market

As I wrote in my previous article on oil, the best-case scenario for the oil market is a three-month extension of current oil production cuts. However, OPEC+ may be unable to reach such a deal if negotiating positions of its members are too far apart.

However, it will be vital to get any deal that could provide support to the market. Otherwise, crude oil inventories may rapidly increase and put serious pressure on oil prices.

While oil is losing ground today, the market continues to expect support from OPEC+ and does not believe in the worse-case scenario which will bring additional production of 2 million barrels per day (bpd) in January 2021. Most likely, oil traders are right, and OPEC+ will manage to craft a deal which will support the market during the first quarter of the next year.

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

Silver Price Forecast – Silver Markets Show Signs of Strength

After forming a massive hammer on Monday, the silver market has follow-through with bullish pressure. A lot of this may have been due to the fact that the US dollar has been on its back foot most of the session, and therefore it is going to take more of those very same US dollars to buy an ounce of silver. Furthermore, we are popping above the top of the hammer that formed right at the 200 day EMA so if there is any place that longer-term traders are going to be paying attention to, I suppose that is a leading candidate.

SILVER Video 02.12.20

Pullbacks at this point in time will probably be supported all the way down to the 200 day EMA, although I am not comfortable jumping “all in” at this point due to the fact that the silver markets of course have been drifted lower for some time, but I do think that we are at a potential inflection point. If we can get a move above the 50 day EMA, that may cause some follow-through in the silver market and therefore I think that it is only a matter of time before we would go looking towards the $26 level. Ironically, the most important chart for the silver market may not necessarily be the silver chart itself. It might be the EUR/USD pair, which has been flirting with finally breaking out above the 1.20 level, which would be a massive breakout.

If that is the case, then we would more than likely see precious metals take off to the upside in a very bullish run. Longer-term I do like precious metals and have been advocating for them for some while, but it has been a tough couple of months.

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