Gold Price Prediction – Prices Consolidate Near All-time Highs as the Dollar Rebound

Gold prices consolidated near all-time highs, as the dollar started to rebound after tumbling for 7-consecutive weeks. US yields moved higher following a report from the Institute of Supply management which showed that manufacturing expanded at the fasted rate since March of 2019. The rebound in yields buoyed the greenback capping upward momentum for the yellow metal.

Trade gold with FXTM

[fx-broker slug=fxtm]

Technical analysis

Gold prices consolidated just below all-time highs following last week’s 3.5% rise.  Support is seen near the 10-day moving average near 1,927. Medium-term momentum has turned positive and continues to accelerate higher as the MACD (moving average convergence divergence) histogram is printing in the black with an upward sloping trajectory points to higher prices. Short-term momentum continues to flip flow back and forth between buy and sell signal. The fast-stochastic is printing a reading of 92 above the overbought trigger level of 80, which could foreshadow a correction. The RSI is printing a reading of 82, above the overbought trigger level of 70 which could foreshadow a correction.

ISM Manufacturing Rises More than Expected

U.S. manufacturing expanded in July at the fastest pace since March 2019. The Institute for Supply Management reported that its manufacturing index rose to 54.2 last month from 52.6. Expectations was for a reading of 53.6 median. The ISM’s measure of production increased in July to 62.1, the highest level since August 2018, and a gauge of orders climbed to 61.5, which was the strongest since September of that year.

Silver Price Forecast – Silver Markets Show Signs of Exhaustion

Silver markets have gotten a bit overextended during the trading session again on Monday, giving back some of the gains. Ultimately, this is a market that I think needs to find either some type of stability, or some type of value in order to continue the uptrend. I do believe that longer-term we are going higher but that huge candlestick from last week I think is defining the range right now. That means that $26 on the top will be the ceiling, while the basement is closer to the $22.55 level. All things being equal though, I do think that at the very least we need to cool off a bit and pull back in order to consolidate, or perhaps even break down a bit from here.

SILVER Video 04.08.20

Either way, I have no interest whatsoever in trying to short this market, as it is far too strong. Furthermore, the Federal Reserve continues to work against the value of the greenback and that of course works for the silver market itself. If that is going to be the case, then I believe that silver is going to go much higher over the longer term, but we may have simply just run out of momentum for the short term. That is okay, the market can go straight up in the air forever so it makes quite a bit of sense that we would have to give back some here. Being patient will be the best way to trade this market, as chasing the trade right now would be very dangerous.

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

Oil Gets Back Above $40 As Traders Cheer Encouraging Manufacturing PMI Data

Oil Video 03.08.20.

U.S. Oil Rig Count Falls Again

The recent Baker Hughes Rig Count report showed that the number of active rigs in the U.S. remained flat at 251. Meanwhile, the number of rigs drilling for oil declined by 1 to 180.

The previous report showed that the number of U.S. rigs drilling for oil increased by 1 to 181. Some traders have started to worry that such increase signals the beginning of a new upside trend in U.S. production which would be bearish for the oil market.

Fortunately for oil bulls, the new Baker Hughes Rig Count report has indicated that U.S. producers are not ready to meaningfully increase production at current oil prices.

This is especially important at times when OPEC+ countries are increasing their production by two million barrels per day (bpd) as they gradually ease the previous production cuts.

For example, Russia has stated that its oil production was in line with the OPEC+ deal in July while it has reportedly increased its oil production in the first days of August.

In this situation, an increase of production from U.S. shale companies could serve as a material bearish catalyst. However, the recent data indicates that U.S. oil production is set to remain mostly flat in the near term, which is good for the oil market.

Positive Manufacturing PMI Reports Provide Support To Oil Prices

WTI oil’s recent attempt to settle below the key $40 level was not successful, and oil is back above $40.

Oil prices got material support from the release of Manufacturing PMI reports. In Euro Area, Manufacturing PMI increased from 47.4 in June to 51.8 in July. In the U.S., Manufacturing PMI grew from 49.8 to 50.9. Numbers above 50 show expansion.

Traders are betting that recent improvements in the manufacturing segment will boost oil demand and support oil prices.

However, it remains to be seen whether the growth in the manufacturing segment will be sufficient enough to offset worries about new restrictive measures which are implemented to stop the spread of coronavirus.

Most recently, Philippines imposed a new two-week lockdown in its capital Manila to slow down the spread of the disease.

In Europe, the travel sector recovery is once again postponed as countries introduce quarantine measures for travellers and require them to wear masks.

According to a recent Reuters report, most potential tourists from UK, France and Germany will skip a holiday if they need to get tested for COVID-19 and are required to wear face masks. This does not bode well for the recovery of jet fuel demand.

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

Crude Oil Price Forecast – Crude Oil Markets Continue to Get Squashed

WTI Crude Oil

The West Texas Intermediate Crude Oil market has done very little during the trading session again on Monday as we continue to see the market chop back and forth. We are essentially stuck between the 50 day EMA on the bottom and the 200 day EMA on the top. If that is going to be the case, then it is likely that what we are going to see is a market that continues to look for some type of longer-term catalyst. Right now, we simply do not have one. We have a lot of things going on at the same time that they seem to be canceling each other out.

Crude Oil Video 04.08.20

Brent

Brent markets of course are doing the same thing, as we have no real drive to go in one direction or another. As long as the US dollar continues to struggle, it is likely that we will see a bit of upward pressure, but at the same time we have to worry about whether or not there is enough demand, and of course whether or not there is going to be compliance when it comes to OPEC countries. So far, the compliance has been relatively strong so that has been one of the boosts higher and of course with the US dollar certainly that helps to. However, and this is a huge thing, demand is most certainly down as the lack of air travel alone has taken a huge chunk out of it.

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

Natural Gas Price Forecast – Natural Gas Markets Shoot Through 200 EMA

Natural gas markets have shot through the roof during the trading session on Monday to kick off the week, slicing through the 200 day EMA. That being said, we are dealing with the $2.00 level, an area that of course will cause a certain amount of psychological resistance. Over the last several months, we have been building on this range, and I think we are trying to put in some type of bottom for the market longer term, due to the fact that we are seen bankruptcies out there, and that should bring down supply in theory. Furthermore, there has been a pretty significant amount of heat in the United States driving up demand.

NATGAS Video 04.08.20

Add in a tropical storm in the fact that the US dollar is losing value, then you have an opportunity for natural gas to reclaim some real estate to the upside. I think we probably have a pullback ahead of us, but I would be willing to buy that dip, especially somewhere near the $1.80 level if we can get down there.

If you have the ability to trade in small increments, then we could be looking at a potential trend change, at least for the second half of the year, which could provide a nice little opportunity. I do not have any interest in shorting this market because we are so low from a historical standpoint. When you zoom out several years, you can see that clearly the $1.50 level was a major turning point more than once.

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

Gold Price Forecast – Gold Markets Pull Back From Major Figure

Gold markets have broken above the $2000 level initially during trading on Monday but have pulled back from that psychologically important level. Ultimately, I think we go well beyond $2000, but it may take some time to get used to the idea. Furthermore, the market has been overextended for a while, so I am more than comfortable sitting on the sidelines and waiting for the gold markets to come back. That being said, if we get a daily close above the $2000 level then it is probably a signal that we are ready to continue.

Gold Price Predictions Video 04.08.20

To the downside I like the $1900 level for support, but I can also say the same thing about $1950. After all, that is an area that I think will attract a certain amount of attention due to the fact that there was a little bit of a gap there. Ultimately, gold is something that I have no interest in shorting and therefore it is a matter of being patient enough to take advantage of the opportunities when it becomes just a bit “cheap.” With that being said, the $1900 level is massive support, but even below there I think the absolute “floor” in the market is closer to the $1700 level.

The 200 day EMA sits right there, and of course between here and there we also have the 50 day EMA which is trading at roughly $1800. All things being equal, there is absolutely nothing on this chart that remotely suggests that you have any business trying to short gold. At this point the question is not whether to be longer short, but rather to own it or wait for cheaper pricing?

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

Natural Gas Price Fundamental Daily Forecast – Expectations of Higher Export Demand, Possible Heat Supportive

A shift in the short-term forecast over the weekend was all it took to revive the sluggish natural gas market on Monday. The news that heat was being put back into the forecast helped offset the generally bearish tone created by worries that Hurricane Isaias would bring in cooler temperatures throughout the Midwest and East Coast.

At 14:30 GMT, September natural gas is trading $2.008, up $0.209 or +11.62%.

NatGasWeather wrote Monday morning, “The weekend weather data was only slightly changed in most models except for the European model, which gained a hefty amount of demand. In fact, the European model was cooler than the rest of the data by nearly 10 CDD’s at Friday’s close, then trended notably hotter over the weekend to now nearly 10 CDD’s hotter than the rest of the data.”

“The natural gas markets are clearly hoping the hotter European model is correct with prices up more than 20 cents this morning. Although, prices were likely aided by LNG/feedgas/exports increasing to 4 Bcf over the weekend to tighten the balance. The European model has been running too hot in most instances this summer, so there risk if it loses some demand to line up better with the rest of the data.”

Additionally, Natural Gas Intelligence (NGI) reported that liquefied natural gas (LNG) feed gas demand jumped higher over the weekend, with Genscape Inc.’s estimate showing a 740 MMcf/d day/day increase on Saturday.

“Recently, a Bloomberg survey of traders found that up to 45 cargo cancellations are expected for the month of August, down from roughly 50 for the month prior,” Genscape analyst Preston Fussee-Durham said.

The largest increase in feed gas inventories occurred at Cheniere Energy Inc.’s Sabine Pass terminal, with volumes to the facility climbing nearly 580 MMcf/d, according to Genscape estimates.

“Effective for today’s gas day (based on timely cycle nominations), feed gas demand from interstate pipelines stands at 3.85 Bcf/d – 0.68 Bcf/d more than July’s average of 3.17 Bcf/d,” Fussee-Durham said.

Daily Forecast

Bullish traders are responding to the news without hesitation. They really had no choice, the weather guys put heat back into the forecast, and demand for feed gas was up. These are short-term bullish factors.

Although there is no significant resistance until $2.499, there is room to rally into a 50% to 61.8% resistance zone at $2.041 to $2.149. Sellers could return on a move into this area.

The return of hot weather and firmer demand for LNG may not have that much of an impact on nearby natural gas futures, but it means a lot to deferred traders who want to see storage supply fall head of the winter demand season.

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

Oil Price Fundamental Daily Forecast – Rangebound as Big Money Waits on Sidelines for Demand Clarity

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are edging higher on Monday, but posting a second-consecutive rangebound day as prices remain inside last Thursday’s unusually wide trading range. The price action suggests a couple of things, investor indecision or the transitioning from bullish to bearish as the market adjusts to COVID-19 related demand shifts that are likely to lead to a rise in global supply.

At 13:30 GMT, September WTI crude oil is trading $40.45, up $0.18 or +0.45%. December Brent crude oil is at $44.54, up $0.37 or +0.84%.

Other analysts agree that prices are being pressured by rising coronavirus cases around the globe and by oversupply worries as OPEC and its allies are set to wind back up output cuts in August, but supported by positive industry data in Europe and Asia.

Stronger PMI Data Out of China, Euro Zone

A private survey released Monday showed China’s manufacturing activity expanded in July. The Caixin/Markit manufacturing Purchasing Manger’s Index came in at 52.8 for July, above expectations for a reading of 51.3 by economists in a Reuters poll.

In the Euro Zone, manufacturing activity across the region expanded for the first time since early 2019 last month as demand rebounded after more easing of the restrictions imposed to quell the spread of the new coronavirus, a survey showed on Monday.

IHS Markit’s final Manufacturing Purchasing Managers’ Index bounced to 51.8 in July from June’s 47.4 – its first time above the 50 mark that separates growth from contraction since January 2019.

Russia is Raising Oil Output as OPEC+ Cuts Ease:  Reuters Source

Russian oil and gas condensate output increased to 9.8 million barrels per day (bpd) on August 1-2 from 9.37 million bpd in July as the country eases production curbs under an OPEC+ deal, a source familiar with data said on Monday. The Energy Ministry declined to comment on the data.

Russia has said it will increase its crude oil production by 400,000 bpd as part of that deal, which does not include output of gas condensate, a light oil.

Daily Forecast

WTI and Brent crude oil could remain rangebound until traders get more clarity about how the new surge in COVID-19 cases will affect demand. Traders are also likely to try to hold prices in a range until they see how the OPEC+ output cut tapering changes the supply dynamic.

With most money managers on the sidelines or investing in other momentum driven markets like the metals, crude oil speculators are getting a little nervous about attacking the long side of the market because of worries over the strength of the demand recovery. Bullish speculators are concerned that the surge in coronavirus cases in the U.S. and around the world could slow the recovery if more restrictions are put into place.

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

Silver Price Daily Forecast – Silver Failed To Get Above Resistance At $24.95

Silver Video 03.08.20.

Silver Finds Itself Under Pressure As U.S. Dollar Continues To Rebound

Silver pulled back closer to $24.00 as the U.S. dollar gained ground against a broad basket of currencies while gold corrected from recent highs.

The U.S. Dollar Index continued its rebound, putting pressure on precious metals and other commodities. The U.S. Dollar Index has managed to settle above the resistance at 93.5 and is trying to get above the 94 level.

If the U.S. dollar continues its upside move, silver may experience more pressure since stronger dollar makes it more expensive for buyers who have other currencies. In case the U.S. Dollar Index will be able to get above the 94 level, it will likely head towards the significant resistance at the 20 EMA at 94.90.

Meanwhile, spot gold made an attempt to test the $2000 level but failed to gain more upside momentum and pulled back closer to $1970. At this point, gold is trying to consolidate just below the $2000 level which is a healthy sign for bulls.

However, a continued rebound of the U.S. dollar may put additional pressure on gold and cause a correction which will be also bearish for silver.

Gold/silver ratio is forming a range between 80 and 85 while volatility decreases. Gold/silver ratio did not manage to immediately rebound after the major downside move that happened in July, which is a bullish development for silver.

Technical Analysis

silver august 3 2020

Silver failed to settle above the nearest resistance level at $24.95 and pulled back. The nearest support level at $24.00 has also been tested during today’s trading session.

Volatility may decrease in the upcoming trading sessions, and silver may find itself in a new trading range between support at $24.00 and resistance at $24.95.

However, this scenario is not guaranteed since silver volatility may increase as a result of rapid moves on the U.S. dollar front or a gold price breakout.

In case silver settles below the support level at $24.00, it will head towards the next support at $23.25.

A move above the nearest resistance at $24.95 will open the way to the test of the next resistance level which is located at recent highs at $26.20.

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

The Trifecta of Key Signals for Gold Miners

Nothing lasts forever, and the brightest flame burns itself out the fastest. That could very well apply to the current situation around PMs.

Speaking of indications pointing to the situation being excessive, let’s take a look at the USD Index.

Remember when in early 2018 we wrote that the USD Index was bottoming due to a very powerful combination of support levels? Practically nobody wanted to read that as everyone “knew” that the USD Index is going to fall below 80. We were notified that people were hating on us in some blog comments for disclosing our opinion – that the USD Index was bottoming, and gold was topping. People were very unhappy with us writing that day after day, even though the USD Index refused to soar, and gold was not declining.

Well, it’s the same right now.

The USD Index is at a powerful combination of support levels. One of them is the rising, long-term, black support line that’s based on the 2011 and 2014 bottoms.

The other major, long-term factor is the proximity to the 92 level – that’s when gold topped in 2004, 2005, and where it – approximately – bottomed in 2015, and 2016.

The USDX just moved to these profound support levels, and it’s very oversold on a short-term basis. It all happened in the middle of the year, which is when the USDX formed major bottoms on many occasions. This makes a short-term rally here very likely.

We even saw a confirmation from USD’s short-term chart.

The U.S. currency finally after a decisive short-term breakout. Back in March, the short-term breakout in the USD Index was the thing that triggered the powerful rally in it, as well as a powerful plunge in the precious metals market.

Consequently, based on this analogy, the implications for the near term are bearish for the PMs. Especially, when we consider the fact that Gold Miners Bullish Percent Index showed the highest possible overbought reading recently.

The excessive bullishness was present at the 2016 top as well and it didn’t cause the situation to be any less bearish in reality. All markets periodically get ahead of themselves regardless of how bullish the long-term outlook really is. Then, they correct. If the upswing was significant, the correction is also quite often significant.

Please note that back in 2016, there was an additional quick upswing before the slide and this additional upswing has caused the Gold Miners Bullish Percent Index to move up once again for a few days. It then declined once again. We saw something similar also this time. In this case, this move up took the index once again to the 100 level, while in 2016 this wasn’t the case. But still, the similarity remains present.

Back in 2016, when we saw this phenomenon, it was already after the top, and right before the big decline. Given the situation in the USD Index, it seems that we’re seeing the same thing also this time.

On Friday, gold moved higher once again, but senior mining stocks refused to move to new highs. They didn’t manage to even erase their Thursday’s decline. The volume that accompanied this daily upswing was relatively low. This means that it’s likely that this is a counter-trend bounce, and not the bigger move higher.

Miners were the first to top, and the short-term breakout in the USD Index indicates that other PM markets are likely to follow.

Please note that the miners topped almost right at the vertex of the huge rising wedge pattern. Quoting last week’s analysis:

(…) huge rising wedge pattern is about to form a vertex today or tomorrow. The same rule that applies to triangles has implications also here. The vertex is quite likely to mark a reversal date. Given the overbought status of the RSI (given today’s upswing, it’s almost certain to move above 70 once again) as well as miners recent unwillingness to track gold during its continuous rally, it’s highly likely in my view that this will be a top.

Combine the USDX situation with Gold Miners’ Bullish Percent and vertex-based reversal, and you get a high likelihood of lower prices in miners next.

Thank you for reading today’s free analysis. Please note that it’s just a small fraction of today’s full Gold & Silver Trading Alert. The latter includes multiple details such as the interim target for gold that could be reached in the next few weeks.

If you’d like to read those premium details, we have good news. As soon as you sign up for our free gold newsletter, you’ll get 7 access of no-obligation trial of 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
Editor-in-chief, Gold & Silver Fund Manager
Sunshine Profits: Analysis. Care. Profits.

* * * * *

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.

 

Price of Gold Fundamental Daily Forecast – Ripe for Correction During Dollar Short Squeeze

Gold futures are taking a breather on Monday from its tremendous rally to record highs in July. The catalyst behind the weakness is a stronger U.S Dollar that is weighing on foreign demand for the dollar-denominated precious metal. A sharp rise in 10-year U.S. Treasury yields is also weighing on gold prices after the benchmark hit a record low yield late last week.

At 13:03 GMT, December Comex gold futures are trading $1984.70, down $1.20 or -0.06%.

Dollar Jumps after Weakest Month in a Decade

The dollar is trading higher against a basket of major currencies on Monday as a squeezing-out of crowded short positions combined with safe-haven demand gave the U.S. currency some respite after its weakest monthly performance in ten years. The greenback lost more than 4% in July, its biggest monthly drop since September 2010.

Dollar Short-Squeeze

Speculators’ net shorts on the U.S. Dollar have soared to their highest since August 2011 at $24.27 billion, Reuters calculations and U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday.

A partial squeezing out of that crowded short position may be the reason for the dollar’s rally and gold’s subsequent reversal to the downside earlier today.

Essentially, the dollar ran out of sellers. Traders could sense it because the downside movement was a bit cautious late last week. It seemed that nearly every short in the Forex market decided to cover at the same time on Friday, creating a tremendous reversal to the upside.

Treasury Yields Bounce Slightly from Last Week’s Record-Setting Drop

Probably exerting the most pressure on gold is a rise in U.S. Treasury yields after last week’s decline pushed some of the front-end rates to record lows.

Yields were pressed lower last week on the hopes of fresh fiscal stimulus from Congress, but members went home for the week-end without reaching deal. Policymakers are likely to have a deal in place this week, but it’s probably being priced into the market already.

Daily Forecast

We’re going to be keeping an eye on the U.S. Dollar, but an even closer watch of Treasury yields. Right now the dollar is going through the early phase of a short-covering rally that could lead to at least a 50% retracement of the recent sell-off. If this were to take place then gold could mirror the move with a 50% retracement of its current rally.

Traders shouldn’t fear a normal 50% to 61.8% correction in gold. In fact, they should embrace it because it would likely lead to a break back into a value area where it would become attractive to long-term investors.

The fundamentals are there for higher prices over the longer-term. However, over the short-run, I can build a case for a near-term correction.

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

Oil Fixed Between $43-44

A new stage of the OPEC+ agreement is coming into effect. Starting from August 1st, the daily reduction of oil production is 7.7 million barrels, which is lower than the previous value, 9.7 barrels. This restriction is supposed to be valid for countries members of OPEC+ until the end of the year.

Market players are worried by the possibility of oversupply. It may well be that a stable price for oil might sooner or later boost the USA to increase oil extraction. This is exactly what is putting pressure on the oil right now.

Another thing that pushes the oil price is the coronavirus: the number of new cases is going up, which means that all pandemic-related risks are not going away anywhere.

In the H4 chart, Brent is still correcting towards 42.80. After reaching this level, the asset may form one more ascending wave to break 44.04 and then continue trading upwards with the short-term target at 45.33. Later, the market may correct towards 44.50 and then start another growth to reach 46.46. From the technical point of view, this scenario is confirmed by MACD Oscillator: its signal line is moving below 0 in the histogram area. After the line leaves the area and breaks 0 to the upside, the correction may be over.

Изображение выглядит как карта, текст Автоматически созданное описание

As we can see in the H1 chart, Brent is consolidating around 43.30; it has already broken this level to the downside and may continue falling to reach the correctional target at 42.80. After that, the instrument may start a new growth to break 43.30 and then continue trading upwards to reach 44.04. And that’s just a half of another ascending wave.

From the technical point of view, this idea is confirmed by Stochastic Oscillator: its signal line is moving to rebound from 50 to the downside. Later, the line is expected to fall to reach 20 and rebound from it. After that, the correction may be over. If later the line breaks 50, the price chart may boost its growth.

Изображение выглядит как текст, карта Автоматически созданное описание

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

Author: Dmitriy Gurkovskiy, Chief Analyst at RoboForex


Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

Daily Gold News: Monday, August 3 – Gold’s Consolidation – a Topping Pattern?

The gold futures contract reached another new record high on Friday at the price level of $2,005.40. The market has slightly extended its recent advance again. The market gained 0.97%, but the closing price was at around $20 below the daily high. Gold reached the highest in history following U.S. dollar sell-off, among other factors.

Gold is 0.4% lower this morning as it is slightly retracing Friday’s advance. What about the other precious metals? Silver gained 3.66% on Friday and today it is 1.3% lower. Platinum gained 0.69% and today it is 0.3% higher. Palladium gained 0.49% on Friday and today it’s 1.2% higher. So precious metals trade within a short-term downward correction this morning. The gold price remains within a week-long consolidation along $1,950-2,000.

Friday’s Personal Income/ Personal Spending data release along with the sentiment numbers have been mixed. Today we will get the ISM Manufacturing PMI number at 10:00, among others. Expectations are at 53.6 – one point above the previous month’s release. The ISM Manufacturing PMI got back above the neutral level of 50 following steep declines in May and June.

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

Monday, August 3

  • 9:45 a.m. U.S. – Final Manufacturing PMI
  • 10:00 a.m. U.S. – ISM Manufacturing PMI, Construction Spending m/m, ISM Manufacturing Prices
  • All Day, Canada – Bank Holiday

Tuesday, August 4

  • 00:30 a.m. Australia – Cash Rate, RBA Rate Statement
  • 10:00 a.m. U.S. – Factory Orders m/m, IBD/TIPP Economic Optimism
  • 9:45 p.m. China – Caixin Services PMI

Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter. Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today!

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.

* * * * *

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.

 

Latest Surge in Risk Assets to Be Challenged by Data and US Congress

US futures are steady as investors have lots to digest including important jobs figures, renewed US-China tensions and a key ruling on the new stimulus package from Congress.

In currency markets, the Dollar could not maintain an early morning rally. After marching towards 93.70, the DXY returned to where it started at 93.45. Low interest rates remain the biggest challenge to attracting Dollar inflows, with current 10-year bond yields stuck near 0.5% and real yields sitting around -1% when deducting for inflation. Large twin deficits along with negative real rates is a depressing formula for any currency, even if it is assumed to be a safe haven one. However, given the bearish bet on the USD has risen again to the largest overall since April 2018, we may see some sort of short squeeze going forward leading to some spikes in the US currency.

With the earnings season coming closer to an end, the focus will shift back to data and the decision by Congress on the next Covid-19 stimulus package. Discussions between the Democrats and Republicans are making some progress especially as both are on same page with regards to the direct cash payment of $1,200 to Americans, but unemployment assistance remains a key sticking point and a middle ground doesn’t seem to have been reached yet. Democrats want to keep the federal assistance as the previous package of $600 per week, while the White House is calling for a third of this amount. The longer the disagreement persists, the higher the chances of a market correction.

While most agree that the bottom in economic activity is behind us, the question has now become whether the US recovery is showing signs of cracking and the Non-Farm Payrolls figure due to be released on Friday will probably answer this. After 7.5 million jobs were created over the months of May and June following 22 million job losses in the prior two months, markets expect another 1.65 million jobs to have been added in July. However, expectations vary greatly with some even expecting a contraction given two consecutive weeks of increases in initial jobless claims. The way forward is likely to be bumpy as several US states are re-imposing lockdown measures after spikes in Covid-19 cases. This probably won’t show up in the data until the release of the August figures in September. Investors should also keep their eyes on other US data releases out this week for further evidence on whether the economic recovery is stalling including manufacturing and services activity, motor vehicle sales, factory orders and the weekly initial jobless claims.

Open your FXTM account today


Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

OIL Break Below 38.80 is Possible as the Price is Bearish

Oil has moved lower making a swing below 40, which implies a possible bearish continuation. We could see 38.80.

The POC zone is 40.50-41.00. We might see a move towards the POC zone first before the next rejection. If not then a direct drop might happen from 40.00. A bearish rejection off the zone should be targeting 39.60 and 39.31. A retest of 38.80 is important. Continuation below towards 37.26 at the break of 38.80. Only above 41.00, bears will be in danger.

The Analysis has been done with the CAMMACD.Core and Sit Systems

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

 

Can Oil Register a 4th Consecutive Monthly Gain?

Recall that more supply is entering the markets this month, after OPEC+ agreed to ease up on its production cuts from the 9.6 million barrels a day in July to 7.7 million in August. Investors may begin to grow concerned that global demand may not yet be solid enough to soak up the restored supply.

At the time of writing, Brent Oil is dipping further away from the psychologically-important $45/bbl level.

Meanwhile WTI crude is threatening to falter back into sub-$40 territory and test its 5-day simple moving average as a support level.

The PMI readings from around the world due on Monday would offer the latest signals about the state of the global economy. China’s July Caixin PMI posted a better-than-expected reading of 52.8, compared to the median estimate of 51.1. Having now registered a PMI reading above 50 for a third consecutive month, China’s manufacturing conditions are firmly in expansionary territory. However, other major economies must also report a similar trend today in order to offer Oil bulls some measure of solace.

Considering the incoming OPEC+ supply, along with the still-tentative recovery in global demand, markets are already expecting Saudi Aramco to indicate that the world isn’t yet ready to tolerate higher prices. The oil giant is slated to lower its selling prices of Arab Light crude to Asian customers for the first time since May in order to help offset the incoming supply. Such a move would suggest that further gains for Oil would be much harder to come by, potentially bringing an end to Oil’s run of three consecutive months of gains. The official September selling price is set to be unveiled within the first five days of this month.

As things stand, major economies across Asia and the Americas are struggling to break out of the pandemic’s grip, which in turn is choking economic activity and the demand for Oil. The longer that daily lives are disrupted by the pandemic, such as commuters being barred from driving to work or to send students to school, the longer Oil prices risk unravelling recent gains.

At least in the interim, Oil prices can enjoy support from the weaker US Dollar and any bouts of risk-on sentiment, as the world continues to wait for more clarity on the global economic outlook.

Open your FXTM account today


Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Precious Metals Weekend Wrap-up August 1, 2020

Now that we have encouraging data, we should be able to make informed decisions concerning on how to move forward. Unfortunately, politicians are making this much worse than it needs to be. The damage they have done to the economy is immeasurable.

It’s reported that 55% of restaurants on Yelp have shut their doors for good. And some estimate that 33% of the hotels in the U.S. could go out of business. In my opinion, the economy is yet to feel the long-term consequences of this economic shutdown.

Gold reached new all-time highs on the back of a declining dollar. I expected a breakout above $2000, but not until 2021 or 2022. What happens next depends on the dollar. If the dollar stabilizes and turns higher, then gold should correct and begin to consolidate. If the dollar continues to crash, then gold could enter a runaway move higher.

The Fed announced no change in its interest rate policy on Wednesday and said it would do everything necessary to support the economy. Sometimes gold and the dollar reverse trends (top or bottom) just after a Fed decision. The dollar formed a bullish engulfing candle on Friday, supporting the potential for a reversal.

The gold cycle indicator remains pegged at 450, and gold is very overbought.

US DOLLAR

Gold is higher as a direct result of the crashing dollar. The dollar is incredibly oversold and due for a bottom, which would imply a top in gold. I’ve mentioned before how prices often reverse on or just after a crucial Fed meeting. The dollar formed a bullish engulfing candle on Friday, 2-days after Wednesday’s announcement. Closing above the 10-day EMA (currently 94.11) next week would sponsor a bottom.

GOLD WEEKLY

It’s rare for prices to slice through a significant resistance level without consolidating first. And for that reason, I’m suspicious of the recent breakout to new all-time highs. When momentum is strong, like now, prices will sometimes overshoot a major level. If this is a momentum overshoot, then gold should stay below $2050 and finally turn lower. A sustained advance above $2100 would signal a potential runaway move.

GOLD DAILY

Gold reached an intraday high of $2005.40 on Friday. Prices are very overbought, and the cycle indicator is maxed out at 450. The trend is well-overdue for a correction. A daily finish below $1971.40 would secure a swing high and signal a potential top.

SILVER

After breaking out above $20.00, silver exploded to our $26.00 target. Prices are overbought and due for a pullback. Closing below $22.50 would support a top. To extend this advance, prices would have to close above the $26.27 spike high.

PLATINUM

Platinum is the last precious metal to breakout to fresh highs. Prices would have to close above $1050 to signal a breakout. Whereas dropping below the cycle trendline would indicate a correction.

GDX

On Thursday, miners closed below Monday’s gap, issuing a potential exhaustion gap sell signal. Miners would have to close above $44.46 to reverse the short-term bearish signal. To confirm a multi-week correction – GDX would have to close below $36.87.

GDXJ

Juniors also closed below Monday’s gap, triggering a short-term sell signal – prices would have to close above $63.31 to reverse it. Otherwise, breaking below $50.00 would confirm the onset of a multi-week cycle correction.

SPY

Stocks consolidated throughout the week but managed to close above the short-term trendline on Friday. It looks like prices will attack the February 329 gap next week. Like gold, the trend is incredibly overbought and ready for a correction.

Have a safe and pleasant weekend.

AG Thorson is a registered CMT and expert in technical analysis. He believes we are in the final stages of a global debt super-cycle. For more information, please visit here.

Natural Gas Price Fundamental Daily Forecast – Weather News Dominates the Trade

Natural gas futures finished lower on Friday as summer heat moderated, a hurricane headed toward Florida potentially zapping cooling demand and surging coronavirus-cases continued to weigh on demand. Bespoke Weather Services expected temperatures in many parts of the country to cool down over the coming week.

Meanwhile, Isaias strengthened into a Category 1 hurricane late Thursday, according to the National Hurricane Center (NHC). At the end of the week, it looks as if the weather is going to dominate the news over the next week or two.

On Friday, September Natural Gas futures settled at $1.816, down $0.013 or -0.71%.

Bespoke also said its weather models showed “a sizable trough diving into the middle of the nation, which pushes eastward slowly” over the first full week of August. “We also expect some impact along the East Coast from Hurricane Isaias the next few days. It is not clear yet if the storm will bring demand destruction to the big cities of the East, but that is a possibility.”

The National Hurricane Center (NHC) said on Friday that the hurricane has crossed the Dominican Republic with sustained winds up to 80 mph and was battering the Southeastern Bahamas with heavy rains and strong winds that threatened severe flooding. The hurricane was expected to approach Florida’s east coast by Saturday, with rain totals up to six inches in some areas over the weekend, the NHC said.

In continuing our weather theme, analysts at Tudor, Pickering, Holt & Co. (TPH) said the sustained intensity of heat over most of July generated strong demand and eased the risk of filling storage.

“On the other hand, weather forecasts are trending materially cooler for August and this will likely push inventories above the high end of the five-year range through August,” the TPH analysts said. They said the latest injection “implies a roughly balanced market on weather-adjusted basis” and expect the coming week to look “very similar, with our early modeling pointing to a build of 26 Bcf.”

Looking ahead to next week, according to NatGasWeather.com for August 3-9, “An unseasonably strong cool shot will bring showers and comfortable highs of 70s to 80s to the central U.S., Midwest and Ohio Valley this week for much lighter national demand. Heavy rain is expected along the East Coast Monday – Tuesday as Tropical Storm Isaias tracks northward. Regionally hot conditions continue across the West and far southern U.S. with highs of 90s to 100s. Warmer conditions will push into the central and northern U.S. next weekend, while hot most elsewhere, increasing national demand back to strong levels.”

Crude Oil Price Update – COVID-19 Demand Issues Continue to Cap Gains

U.S. West Texas Intermediate crude oil futures finished higher on Friday just one day after a plunge nearly erased all of the month’s gains. That move ensured a lower close for the week. Prices were boosted on Friday by the news that U.S. oil output cuts in May were the largest on record.

On Friday September WTI crude oil settled at $40.43, up $0.51 or +1.28%.

U.S. crude oil production plummeted in May, falling a record 2 million barrels per day to 10 million bpd, the U.S. Energy Information Administration (EIA) said in a monthly report on Friday.

In related news, Chevron Corp reported an $8.3 billion loss on asset write-downs and ExxonMobil Corp recorded a second consecutive quarterly loss.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. The trend turned down on Thursday when sellers took out three main bottoms at $40.48, $39.97 and $38.77 before stopping at $38.72.

A trade through $38.72 will signal a resumption of the downtrend, while a move through $41.93 will change the main trend to up.

On the upside, the major resistance is a long-term 50% level at $41.72.

On the downside, retracement zone support comes in at $39.92 to $39.30.

The new minor range is $41.93 to $38.72. Its 50% level at $40.32 acted like minor resistance on Friday. It could control the direction of the trade on Monday.

Short-Term Outlook

The news writers said that the market was supported by some bullish data from May. Obviously it is stale news. If you followed the Baker Hughes numbers released each Friday, you would’ve seen a drop in the number of producing oil rigs. This means production was going down. No surprise there.

Prices are likely to remain in a range, but with a bias to the downside as long as the number of coronavirus cases continues to rise. This is because of its impact on demand. However, as long as OPEC+ continues to trim production, the supply side shouldn’t get out of control.

From a technical perspective, unless a vaccine is developed over the near-term, buyers are going to have a hard time overcoming the major resistance at $41.72.

Meanwhile, a sustained move under $39.30 could trigger an acceleration to the downside. The daily chart shows $36.96 to $35.83 is a potential downside target. This may actually be good because this zone represents value so a test of this area is likely to attract new buyers.

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

Gold Price Futures (GC) Technical Analysis – Protect the Downside, the Upside Will Take Care of Itself

Gold futures closed higher on Friday after hitting a new contract high early in the session. The market gave back some of its gains when Treasury yields rose slightly and the U.S. Dollar recovered from more than a two-year low.

Spot gold also reached a new all-time high with the market posting it best month since February 2016, and its fifth straight positive month.

Despite Friday’s new high, traders looked a little cautious with the new high coming in only $5.40 higher than the previous high earlier in the week before the intraday pullback. This suggests a shaky outlook over the short-run.

However, the longer-term picture remains bullish with the market tracking real interest rates that are hovering near zero percent. Extreme weakness in the U.S. Dollar also helped buoy gold prices last month with the greenback posting its biggest monthly drop in almost a decade.

On Friday, December Comex gold futures settled at $1994.00, up $27.20 or +1.38%.

Daily December Comex Gold

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Friday when buyers took out $2000.00. A trade through $1819.30 will change the main trend to down. This is highly unlikely, but investors should be aware of the potentially bearish closing price reversal top.

The minor range is $1927.50 to $2005.40. Its 50% level at $1966.50 is the nearest support.

The short-term range is $1819.30 to $2005.40. Its 50% level at $1912.40 is another potential support level.

This is followed by a series of retracement levels at $1896.90, $1888.70, $1871.20 and $1861.20.

Short-Term Outlook

There are no minor bottoms in the picture, but $1952.30 has the characteristics of a minor bottom. Another level to watch is $1927.50. This low was put in when gold dropped $72.50 on July 28.

If a top is forming then the market should stair-step down, first taking out $1966.50 then $1952.30. These are only minor levels but novice traders like to put ill-advised stops under these levels. The next such level is $1927.50.

The value levels are where the buyers are lurking. They come in at $1912.40 and the support cluster at $1896.90 and $1888.70.

In other words, $1966.50 $1952.30 and $1927.50 are weak support levels. The best is $1896.90 to $1888.70.

The decision for short-term traders is to chase the market higher or play for a pullback into value.