Natural Gas Price Fundamental Weekly Forecast – Will Bulls Betting on Late January Polar Vortex Be Disappointed?

Natural Gas futures closed higher last week, helped by a recovery in prices on Friday as traders reacted to mid-session weather reports calling for regional blasts of cold in key demand areas late in the month. The news was enough to scare some of the weaker shorts out of the market but forecasts calling for generally comfortable conditions across most regions of the Lower 48 during the third week of January helped to cap gains.

Last week, March natural gas futures settled at $2.696, up $0.040 or +1.51%.

US Energy Information Administration Weekly Storage Report

The EIA reported last Thursday that domestic supplies of natural gas declined by 134 billion cubic feet for the week-ended January 8. On average, the data were expected to show a drop of 123 billion cubic feet for the week, according to analysts polled by S&P Global Platts.

Total stocks now stand at 3.196 trillion cubic feet, up 126 billion cubic feet from a year ago, and 218 billion cubic feet above the five-year average, the government said.

Short-Term Weather Outlook

According to NatGasWeather for January 15-21, “A weather system with rain and snow will extend from the Great Lakes to the Southeast the next few days with highs of 30s to 50s for a minor bump in demand, although countered by mild conditions over the rest of the U.S. with highs of 40s to 70s. Frigid air with lows of -10s to 20s will arrive across the Rockies and Northern Plains next week, although more than countered by warm versus normal highs of 40s to 70s over the South and East.”

Weekly Forecast

Prices could trade rangebound this week because of generally comfortable weather conditions across most regions of the Lower 48. This could cap gains while strong demand for liquefied natural gas (LNG) provides the support.

Traders will be keeping an eye on the ever changing outlooks for the last week in January. According to Natural Gas Intelligence (NGI), the final week of January holds promise for intense cold settling in over the Northwest and Plains before moving east. This could result in several days of freezing temperatures over large swaths of the country.

“We view the January 26-29 period as one of the best chances this winter for cold to finally come through,” NatGasWeather said Friday.

If the prediction for a polar vortex – a cold snap that develops in the atmosphere above the North Pole and sends harsh blasts of freezing temperatures throughout the Northern Hemisphere – holds true then look for upward pressure on domestic gas prices.

If there is no polar blast of cold air then prices will retreat. However, I don’t see a test of the recent lows unless there is a significant drop in demand for LNG.

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

Gold Bears Continue to Dominate

Gold should continue with the bearish trend. We should see a continuation towards 1800 and lower.

2 POC will try to reject GOLD. Those zones are selling zones. 1831-37 and 1845-50 whichever comes first. 1810 has already been tested so I expect the break lower towards 1800 and 1792. The trends bearish and we shouldnt see any surprises. The 1840 zone acts as a temporary resistance to the current move.

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

Cheers and safe trading,

Nenad

 

Oil Price Fundamental Weekly Forecast – Firming US Dollar, Global Demand Concerns Driving the Price Action

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures finished mixed last week as the rally ran out of steam amid new coronavirus-related demand concerns and worries over a slowing U.S. economy.

The news was just bearish enough to encourage investors to lighten up on the long side, which suggests a short-term correction may be in the making. Longer-term traders are not too worried since they expect OPEC+ production cuts and Saudi Arabia’s voluntary output reductions to provide amble support.

Last week, March WTI crude oil settled at $52.42, up $0.16 or +0.31% and March Brent crude oil finished at $55.10, down $0.89 or -1.62%.

To Recap the Week:

US Government Reports Another Bullish Draw

The market is also being underpinned by another reported drawdown in U.S. crude oil stockpiles, though gasoline and distillate inventories rose as refiners ramped up output to the highest level since August, the Energy information Administration said on Wednesday.

Crude inventories fell by 3.2 million barrels in the week to January 8 to 482.2 million barrels, compared with expectations in a Reuters poll for a 2.3 million-barrel drop. U.S. gasoline stocks rose by 4.4 million barrels in the week to 245.5 million barrels, compared with expectations for a 2.7 million-barrel rise. Distillate stockpiles rose by 4.8 million barrels in the week, versus expectations for a 2.7 million-barrel rise.

Refinery crude runs rose by 274,000 barrels per day in the last week, the EIA said. Refinery utilization rates rose by 1.3 percentage points, in the week, boosting overall refining use to 82% of capacity, highest since August.

China Crude Imports Jump in 2020

Crude imports into China were up 7.3% in 2020, with record arrivals in two out of four quarters as refineries increased runs and low prices prompted stockpiling, customs data showed on Thursday.

IEA Says Oil Market Outlook Clouded by Vaccine Roll-Out Variables

Oil producers face an unprecedented challenge to balance supply and demand as factors including the pace and response to COVID-19 vaccines cloud the outlook, and official with the International Energy Agency (IEA) said on Wednesday.

Biden Pledges New COVID Relief

U.S. President-elect Joe Biden on Thursday revealed details of a $1.9 trillion coronavirus rescue package. Biden’s proposal, called the American Rescue Plan, includes some familiar stimulus measures in the hope of sustaining families and companies till vaccines are widely distributed. Some of the proposed measures include stimulus checks as well as unemployment support.

US Recovery Weakening

On Thursday, the Labor Department’s weekly jobless report showed the number of Americans filing first-time claims for unemployment benefits increased more than expected last week, underscoring the impact of a resurgence in COVID-19 infections.

U.S. retail sales fell for a third straight month in December amid job losses and renewed measures to slow the spread of COVID-19, the Commerce Department reported on Friday, further evidence the economy lost speed at the end of 2020.

Weekly Forecast

At the end of last week, crude oil prices were being controlled by the U.S. Dollar and worries over rising coronavirus cases in China. We expect to see much of the same this week as a drop in risk sentiment due to a weakening U.S. economy is expected to continue to drive investors into the safe-haven greenback. Since crude oil is a dollar-denominated asset, foreign demand is expected to come in lighter, pressuring prices.

We should learn a lot about the spread of COVID-19 cases in China over the near-term by its decision as to whether citizens will be allowed to travel to various cities to celebrate the Lunar New Year in February.

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

Gold Prices Melting Fast amid Expected Rise in Inflation

Gold traders are momentarily shorting the metal that has already suffered its second straight weekly decline amid a strong rebound in the greenback’s value overshadowing the yellow metal’s appeal as an inflation hedge after the U.S. Joe Biden proposed a new $1.9 trillion COVID-19 support program a few days ago.

In addition, the U.S dollar value against all odds printed impressive gains coupled with recent upticks in U.S. Treasury yields, lead gold futures in moderating below $1,825/ounce at press time.

Also, what seems to be taming gold bugs presently is the greenback’s sudden rise which is applying downward pressure on precious metals taking into consideration the US Dollar Index that is used in tracking the dollar strength against a basket of major currencies rallied above its 3 week high.

It’s vital to note, gold prices had been under pressure in the month of January amid growing sentiments revealing global investors preferred to hold the US dollar despite the Federal Reserve Chair Jerome Powell’s recently issued dovish statements saying interest rates would not rise in the near future.

That said, what is also weighing hard on gold prices is the US Treasury yields, on the account that has the price higher, it will limit gold’s gain in the near term U.S Treasury yields have a higher chance of more upsides, which could likely pose a big gold problem.

Recent price actions suggest gold traders are caught between longer-term buying of the hard safe-haven asset on the back of expected rising inflation, massive quantitative easing programs in play or shorting the bullion asset arbitrarily as the value of the greenback recovered amid rising cases of viral infections in Western Europe and United States.

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

Precious Metals May Decline Before Their Next Attempt to Rally

My team prepares Custom Valuations Index charts to understand how capital is being deployed in the global markets alongside US Dollar and Treasury Yields.  The purpose of the Custom Index charts in this article is to provide better insight into and understanding of underlying capital movements in various market conditions.  Recently, we discovered the Custom Index chart shares a keen alignment with Gold (and likely the general precious metals sector).  Let’s explore our recent analysis to help readers understand what to expect next in precious metals.

Weekly custom valuations index chart

The first thing that caught my attention was the very clear decline in the weekly Custom Valuations Index recently, as can be seen in the chart below.  The second peak on the Custom Valuations Index chart occurred on the week of August 3, 2020.  Gold also peaked at this very same time.  This alignment started an exploratory analysis of the Custom Valuations Index and the potential alignment with the precious metals sector.

The peak in the Custom Valuations Index on March 20, 2020 (near the height of the COVID-19 market collapse) presented a very clear upside target which was confirmed with a second peak level in August 2020.  The fact that the Custom Valuations Index reached that peak level again and that peak level also aligned with the peak price in Gold may just be a coincidence.  As we continue to explore this unique alignment, we’ll explore more unique characteristics to see if there is a link that is more than mere chance.

There have been two very clear Pennant/Flag formations as you can see on the above weekly Custom Valuations Index chart.  The first one is highlighted in BLUE and the second one is highlighted in GREEN.  In both of these instances, the Custom Valuations Index broke lower and Gold followed this trend.  Currently, the Custom Valuations Index has begun to breakdown into a new bearish trend. This suggests that Gold and Silver may also move lower as this Custom Index attempts to find a bottom.

Now, let’s do a more in-depth analysis of Gold and the Custom Valuations Index.  In the following charts, we’ve attempted to highlight key price traits that took place in Gold over the past 9+ years and wanted to see if these key price points were reflected in the Custom Valuations Index chart.  The purpose of this is to identify if our assumption that the Custom Valuations Index chart is aligned to Gold (in some way) shows any additional (past price) alignment to validate our thinking.

Weekly Gold chart

First, we’ll start with a Weekly Gold chart that highlights key price points, peaks, bottoms, and breakout/breakdown events.  We want to see if the Custom Valuations Index chart also aligned with these key price moves/dates.

The following Gold Futures Weekly chart highlights the Appreciation/Depreciation cycles we’ve identified in earlier research as well.  The GREEN ARCs near the bottom of the chart show you where each cycle starts and stops.  The RED descending line represents a Depreciation Cycle and the GREEN Ascending line represents an Appreciation Cycle.  We are focusing on the September 2011 peak price in Gold and the key price events after the “Failure Peak” that took place to set up the bottom in early 2015, the rally in early 2016, and the breakout rally in June 2019.  Does the Custom Valuations Index chart show these same characteristics and dates?

Weekly Customs Valuation Chart and Gold Price History

This next chart is the Weekly Custom Valuations Index chart with the same highlighted price points/dates.  The first thing we see from this chart is that the “Failure Peak” (October 2012) was a higher price peak on this Custom Index chart than the setup on the Gold chart at the same time.  Thus, the Custom Valuations Chart represented the extended “excess phase” top in Gold as a continued upward trend.  The downtrend after the October 2012 peak on this Custom Valuations Index chart does align with the big breakdown on the Gold chart (above).

Additionally, the early 2015 bottoming on the Custom Index chart represented a very early sign that Gold may be looking for a bottom as well.  Gold did move lower throughout the next 11+ months, but so did the Custom Valuations Index price. It makes sense that the Custom Valuations Index may be representing underlying key market dynamics that could be applied to the Gold chart in some way.

The Initial Gold Rally in February 2016 was the first real clear trigger on both these charts that coincided with a breakout/rally trend in Gold.  This rally attempt eventually stalled near the end of 2016 and began an extended “momentum base” setup.  Notice how the Custom Valuations Index chart represented this momentum base as and extended sideways Pennant/Flag formation that ended near June 2019.  Also, notice how the stalling in the Custom Valuations Index chart initiated many weeks before Gold actually peaked in 2016.

From the February 2019 Breakout, we can clearly see the impressive rally in the Custom Index chart aligned with a big rally in Gold.  What is interesting is the DUAL PEAK in the Custom Index chart that first setup from the lows of the March 2020 COVID-19 bottom.  Could it be that extreme price move somehow represented a key future target for Gold and for the Custom Index chart?

There is very little corresponding data to compare to – so we’ll have to continue to try to dig deeper for any confirmation of this unique setup. Yet, we can’t underestimate the DUAL PEAK setup on the Custom Index chart and the fact that the second peak, August 2020, also aligned perfectly with the current peak price in Gold. Since that August 2020 peak, both Gold and the Custom Index chart have continued to breakdown and trend lower.  It makes sense that Gold will continue to move lower, in alignment with the Custom Index chart, attempting to find a new bottom/momentum base.  We believe the 200 to 240 level on the Custom Valuations Index chart may be a suitable range for this new bottom.

One thing we can say with a moderate degree of certainty is that the Custom Valuations Index chart appears to lead the precious metals in many instances and it appears to perfectly align in other instances.  Our research suggests the US and global markets have recently entered a Depreciation Cycle phase which may last many years.  The Custom Valuations Index chart is suggesting that the US, global and precious metals sectors are weakening and attempting to find/set up a new momentum/base.

This would suggest that capital will move away from precious metals as well as major market sectors and attempt to find opportunities in undervalued or other hot sectors.  Eventually, once the new momentum base/bottom is firmly established in Gold and the Custom Valuations Index chart, the US and Global major market sectors will likely resume a very strong upside price trend.

The key take-away from this research is that sector rotations related to precious metals, major global markets and potential early warning signs of strength or weakness may be attainable by focusing on how the Custom Valuations Index trends in comparison to Gold and the major indexes.  Currently, the Custom Valuations Index is suggesting that precious metals will move lower and try to find a new bottom/base.  This means other market sectors will perform better than precious metals for a period of time.

This is also an important reason to focus your attention on finding the best and hottest sectors for new trade opportunities.  When broad components of the market enter bearish trends, like the Custom Valuations Index is suggesting for precious metals, it is best to have a proven system for identifying the best sector trends and trade opportunities.  While one sector may stall, others are rallying.  Long term success is found by focus your trading capital on the strongest opportunities while avoiding weaker trends.

2021 is going to be full of these types of trends and setups.  Quite literally, hundreds of these setups and trades will be generated over the next 3 to 6 months using my BAN strategy.  You can learn how to find and trade the hottest sectors right now in my free one-hour BAN tutorial.

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

Enjoy your weekend!

Chris Vermeulen
Chief Market Strategist
www.TheTechnicalTraders.com

 

Gold Sheared, Silver Smeared

160121_gold_scoreboard

But relax: have a cracker ‘n schmear, perhaps even a beer, and we’ll try to relate to making it all clear.

To be sure — given all that we and you from here to Kalamazoo fundamentally understand about Gold – its moving lower in the ongoing financial environment makes nary a wit of sense whatsoever. The market is never wrong by traders having put price where ’tis, irrespective of its going the wrong way.

And given the fundamental precious-metals-positive state of essentially everything, ’tis diabolical that price descend.

Indeed as Gold leaped out of the gate to commence the New Year by gaining +3.2% (and Silver +6.0%) within the first three trading days, it struck us that our call for a Gold high this year of 2401 may have been too conservative. And from the “Under-State and Over-Deliver Dept.”, such 2401 forecast may still be too conservative even given the present pullback.

Either way, Gold settled out the week yesterday (Friday) at 1828 … which is but half the above Scoreboard’s debasement valuation of 3644. Moreover, ’tis before President-to-be-Biden rolls out his nearly $2 trillion instant COVID/economic relief plan, which with Congress now all “blue” ought pass right through.

“But even that is already priced into Gold, right mmb?”

Of course ’tis, Squire, just as always is everything. (Pity the poor trader who thinks he has it all figured out before anyone else does: “Take a seat at the back of the bus, buddy…”).

And again, please spare us the argument that bits**t is the modern alternative to Gold. Cryptocrap — which within two trading days just fell -27% — ain’t fallin’ into our lap.

And again (again), the fundamental stance for Gold we continue to view as 100% positive given the ever-burgeoning levels of the 3Ds (Debasement, Debt, Derivatives), the declining Economic Barometer (as we’ll below show), COVID clearly not contained (nor the effects of its vaccines preordained), and the endless spending of even more $trillions beyond the initial $2 trillion under Biden/Harris/Congressional reign!

So: why has Gold been declining? Reprise: the technical stance for Gold may merely be viewed as price having leapt too far too fast, as least by its recent deviation above the 300-day moving average.

To wit: since the start of the millennium we’ve had 5,043 trading days. Therein, Gold has settled more than 10% above its 300-day moving average a fair amount of the time: 1,697 days, to be precise (or one-third of days overall). That alone is a testament to the price of Gold rising over the long-term whilst all of the aforementioned fundamentals reduce the value of the faux dough Dollar.

In commencing 2021, so swift was Gold’s up move that price found itself nearly 13% above its 300-day moving average. And from the year 2001-to-date, Gold’s average price decline within three months upon a deviation of greater than 10% above that average is -6.2% (the standard deviation being 4.9%). So with Gold recently settling at 1954 (05 January), ’twas +12.6% above said average. A -6.2% decline from there puts price at 1833, (the recent low being 1817). ‘Course, hardly have three months yet to ensue: thus let’s further subtract the standard deviation which puts price down to 1739. On verra, but a positive Gold stance by the fundamentals belies such demise.

Besides, as we saw a week ago, Gold’s weekly parabolic trend has flipped from Short to Long, dubious as it appears on the following graphic of the price bars from one year ago-to-date. The wiggle room between the rightmost blue dot (1771) and present price (1828) is but 57 points, somewhat daunting as Gold’s “expected weekly trading range” is now 72 points. Thus the new Long trend is within range of being Short-lived.

And to quickly flip back to Short would leave any fundamentalist further flabbergasted. The point is: the Gold Bull ought not be put out of sorts should the lower 1700s be tested. Indeed, Gold appears to be structurally supported in the 1792-1673 range, but we don’t honestly find any rationale for price to venture there.

160121_gold_weekly

‘Course, the Dollar has actually been getting a bit of a bid to start the year, which in turn is why the BEGOS Markets year-to-date ain’t lookin’ all that great, the sole exception being Oil which typically shall slide during a Dollar up-glide. (Speaking of Oil for those of you who follow the website’s Market Rhythms page, the 12-hour MACD study looks to confirm a negative crossing in starting the new week). Otherwise, through these first 10 trading days of 2021, Gold as we below see is thus far the weakest of the five primary components which comprise BEGOS:

160121_begos_markets

In trying to ferret it all out from the FinMedia, one may be better off with a shot of tequila. Try these “back-to-back” readings from the Dow Jones Newswires: “…the labor market is losing momentum amid rising coronavirus cases…” (followed by) “…This Could Be the Best Year on Record for Job Growth. Gains are expected to be driven by a re-emerging economy…” That must have come from their “Now and Then Dept.”

Or try this FinTimes and Reuters bit: “…JPMorgan, Citigroup and Wells Fargo cite increased certainty on vaccines and improving economic outlook…” (followed by) “…U.S. Labor Market Losing Speed as COVID-19 Spirals Out of Control…”

And we know throughout history that such opposing opinions when elicited as policy result as follows:

160121_deux_locos

And it appears that the S&P finally is beginning to crack, the “live” price/earnings ratio being essentially a record — indeed stratospheric — 78.7x and our “textbook” technicals reaching “extremely overbought” this past Tuesday into Wednesday. ‘Tis right in line as we’ve written of late that the S&P “is horribly due for a massive crash”.

Even a terrific Q4 Earnings Season would hardly right this ship: bottom lines ought need triple to-quadruple just to get the P/E in line with any acceptable historical norm. And hardly is the economy helping: beyond December’s improvements in Industrial Production and Capacity Utilization, the month’s Retail Sales actually shrank whilst Import and Export Prices rose. Can you say “stagflation”? As well, January’s New York Empire State Index sported its weakest reading since July.

Then we’ve Cleveland FedPrez “Jump Back” Loretta Mester pointing to the StateSide economy’s needing strong 2021 government support, (and you know ’tis coming in $trillions: Got Gold?) Chiming in, too, is overall FedHead Jerome Powell stating the road to recovery for jobs is long with open-ended easy money to remain available. Again: Got Gold?

Still, not everyone has got Gold (now that is to Under-State) nor are stocking up en masse as we turn to our two-panel graphic of Gold’s daily bars from three months ago-to-date on the left and those for Silver on the right. Problematic for both markets is their respective sets of “Baby Blues” falling below the 0% axis, meaning that the 21-day linear regression trends have rotated from positive to negative: Sheared and smeared, indeed:

160121_gold_silver_dots

And as for the past fortnight — which is year-to-date — both precious metals obviously find themselves near the bottom of their respective 10-day Market Profiles:

160121_gold_silver_profiles

We’ll sum it up here with the stack:

The Gold Stack

  • Gold’s Value per Dollar Debasement, (from our opening “Scoreboard”): 3644
  • Gold’s All-Time Intra-Day High: 2089 (07 August 2020)
  • Gold’s All-Time Closing High: 2075 (06 August 2020)
  • 2021’s High: 1963 (06 January)
  • The Gateway to 2000: 1900+
  • 10-Session “volume-weighted” average price magnet: 1887
  • Trading Resistance: (most immediate) 1843 / 1849 / 1859
  • Gold Currently: 1828, (expected daily trading range [“EDTR”]: 34 points)
  • Trading Support: none per the 10-day Market Profile
  • 10-Session directional range: down to 1817 (from 1963) = -146 points or -7.4%
  • 2021’s Low: 1817 (11 January)
  • The Final Frontier: 1800-1900
  • The Northern Front: 1800-1750
  • The Weekly Parabolic Price to flip Short: 1771
  • On Maneuvers: 1750-1579
  • The 300-Day Moving Average: 1745 and rising
  • The Floor: 1579-1466
  • Le Sous-sol: Sub-1466
  • The Support Shelf: 1454-1434
  • Base Camp: 1377
  • The 1360s Double-Top: 1369 in Apr ’18 preceded by 1362 in Sep ’17
  • Neverland: The Whiny 1290s
  • The Box: 1280-1240

Next week is lite for incoming economic data and brings joyous relief for the media in welcoming the 46th President of the United States via an Inauguration replete with virtual festivities. But ’tis said the 47th President in terms of time may not be far behind. So let the StateSide and geo-political schmear unfold whilst you fortify your financial well-being with Gold!

160121_25th_sec3

Cheers!

www.deMeadville.com
www.TheGoldUpdate.com

Darkest Before Dawn

This includes the release of the preliminary January PMI figures at the end of the week. Japan is extending its national emergency to another five prefectures, which collectively account for over half of the nation’s GDP. Germany’s Merkel, not given to hyperbole, warns that the lockdown may last ten more weeks. The Dutch do not appear far behind. England is talking bot tightening its restrictions. Even China appears to be experiencing a flare-up. The pandemic is out of control in the US, although the curve appears to be flattening in some areas.

It was widely recognized that the virus and vaccine are going to dictate the economic story in 2021. The new variant of the virus is more contagious and the roll-out of the vaccine has been frustratingly slow in most countries. The recovery in Q3 seen among the high-income countries was a dramatic snapback but for many, it was not the beginning of a sustained recovery. That recovery may be several months away. The point is that the economic risks for the remaining Q4 20 data and for Q1 21, which just began, are on the downside.

If that is indeed the case, then why have bond yields risen? Is this another disconnect between Main Street and the House of Finance, like stocks rallying during the pandemic? It is darkest before dawn and whether it is four months or six months, the investors expect better news in the second half of the year. At the same time, there will be a new stimulus push in the US. The UK Chancellor of the Exchequer will have to extend aid as the lockdown is extended and intensified. It is likely Germany will have to, as well. Italy’s projected debt issuance is a third higher than it was a couple of weeks ago.

At least four Fed officials have said they could consider tapering before the end of the year. To be specific, the four are regional presidents, while the governors, including Powell and Clarida, have played this down. Currently, the Fed is buying $80 a month of Treasuries (about 55% have been notes of 4.5-years or less before maturing and about 13% in the 20-30 year bucket) and $40 bln a month in Agency mortgage-backed securities. No one is saying that tapering is imminent and a majority of officials that have spoken suggest it does not look particularly likely this year at all. That was also the thinking in last month’s primary dealer survey conducted by the Federal Reserve.

Yet if tapering is not the real culprit for the sharp rise in US yields this year, what is the driver? Where you begin your narrative points you in the direction of the answer, In one telling, the US 10-year yield has risen by around 45 bp since the election as investors discounted greater supply and became more committed to the reflation trade, which means higher real rates, and arguably a sensitivity for higher inflation. At the same time, the price of oil has surged.

The February WTI futures contract closed in October near $36.5. It approached $54 a barrel before profit-taking kicked-in ahead of the weekend. Recall that end of last January it was around $50.50. The deflationary thrust from oil prices has ended. Inflation expectations often track significant moves in oil prices.

Asian demand, including China’s apparent inventory accumulation, drove industrial metal prices higher at the end of last year. On the other hand, supply concerns following last week’s disappointing report on US plantings saw corn and soy prices rise to 6-7 year highs, and cotton traded at a two-year high. The CRB index has risen by over 22% since the end of October.

Even the coming Treasury supply may be exaggerated by partisans. The idea from both sides is that Biden will press ahead with the Democratic control of the legislative branch to push through the rest of the $3.2 trillion bill passed by the House of Representatives last year. However, we suspect it is more likely that Biden, judging from his disposition and that he learned from his experience with Obama, will avoid antagonizing the opposition and souring the relationship from the get-go. Instead, he is likely to find a compromise and make it bipartisan even if it results in a small package. In appointments and temperament, Biden is moderate.

Biden will be inaugurated on January 20. The day before, Yellen will speak at her confirmation hearings. In addition to broad economic issues, she will likely be asked about the dollar. As an economist, she recognizes that ideally one wants the currency to move in line with policy, otherwise it blunts or undermines it. At the Federal Reserve, she recognized that dollar policy is a Treasury remit. That makes it her call now.

The “strong dollar” mantra that existed before 2016 cannot simply be returned to now. A new formulation is needed to confirm that the US will not purposely seek to devalue the dollar to reduce its debt burden or for trade advantage. To signal a multilateral spirit, Yellen may be best served by reiterating the G7 and G20 stance that markets ought to determine exchange rates, that they should move in line with fundamentals, and avoid excess volatility. It does not have to be the final word, but as the first word, it would be reassuring.

Four G10 central banks meet in the coming days. The gamut of outcomes is likely, with the ECB, ironically, being the least perhaps the least interesting. Since it met on December 10, the pandemic has gotten worse and social restrictions and lockdowns have intensified and lengthened. The uncertainty of the US election and UK-EU trade negotiations has been resolved. Key hurdles to the EU’s budget and Recovery Fund were lifted.

The day before the last ECB meeting, the euro settled near $1.2080. It settled last week around $1.2150. March Brent was trading a little below $49 is rallied to almost $57.5 last week before consolidating. The 10-year German Bund yield has risen around 10 bp (to around minus 50 bp) and Italy’s premium has softened from almost 120 bp before the December meeting to almost 100 bp before widening again (115 bp) amid the political challenges in Rome. There is little for the ECB to do now.

The extension of the emergency in Japan to cover the area which generates more than half of the country’s output raises the downside risks. The central bank is likely to formally recognize this in one or two ways. It may shave its downgrade its qualitative assessment. It could also adjust its forecasts. In its last forecasts, issued in October, it anticipated the economy to contract 5.5% in the current fiscal year. Its previous forecast was for a 4.7% slump. The BOJ could also reduce the projection of growth for the next fiscal year, which was seen at 3.6%, up from 3.3% last July.

While peak monetary policy may generally be at hand, the Bank of Canada may be an exception. The overnight target rate sits at 25 bp. It is clear that officials do not want to adopt a negative rate, but Governor Macklem has suggested the lower bound for Canada maybe a little lower than where it is now but still above zero. Given the economic consequences of the spreading virus and some disappointing high-frequency data, the market (overnight index swaps) has a few basis points of easing discounted. It may not exactly be clear what a small rate cut achieves, but last year, the Bank of England and the Reserve Bank of Australia delivered small moves of 15 and 10 bp respectively.

Before this intensification of the virus, the Bank of Canada had seemed to be a candidate for an early exit from emergency policies. Now Norway’s Norges Bank appears at the front of the line. At its last meeting in the middle of December, the central bank brought forward its anticipated first hike to the first half of 2022. Since the December meeting, the high-frequency data points suggest that economic activity and prices are more resilient than feared.

The economy contracted by 0.9% in the three months through November. It was also half as bad as economists projecting. Underlying CPI, which adjusts for tax changes and excludes energy, rose by 3% year-over-year in December. The record drawdown from the sovereign wealth fund provided an early and strong fiscal cushion.

Two emerging market central banks of note meet as well next week. Turkey’s new central bank governor Agbal has made several steps that have given notice that there is a new economic regime. On Christmas Eve he delivered a 200 bp hike outstripping median forecasts for a 150 bp move. The one-week repo rate now stands at 17%. Inflation reached 14.6% last month.

Since the end of last October, the Turkish lira has been the strongest currency in the world, appreciating by about 13.4% against the US dollar. It is still off a little more than 19% since the end of 2019. Over the past three months, the yield on its 10-year dollar bond has fallen by about 105 bp to 5.60%. The market is signaling another rate hike is not needed.

The South African Reserve Bank can also stand pat, though for different reasons. SARB cannot afford to cut any further. Its repo rate is at 3.5% and December CPI stood at 3.2%. After cutting by 300 bp last year, the central bank held steady at the last two meetings of 2020. The implied policy path of SARB’s projections points to a rate hike in Q3 and Q4 this year., though we are a little skeptical that it can be delivered.

This article was written by Marc Chandler, MarctoMarket.

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

Oil Price Fundamental Daily Forecast – Dollar Strength, China Lockdowns Encourage Longs to Trim Positions

U.S. West Texas Intermediate and international-benchmark crude oil futures finished sharply lower on Friday as a stronger U.S. Dollar weighed on foreign demand for the dollar-denominated asset. Weak U.S.  economic data also raised concerns about domestic demand.

Meanwhile, U.S. Drillers continued to add rigs to take advantage of higher prices and OPEC+’s willingness to give up market share. Coronavirus lockdowns in China and U.S. stimulus concerns also pressured prices.

On Friday, March WTI crude oil futures settled at $52.42, down $1.20 or -2.24% and March Brent futures finished at $55.10, down $1.32 or -2.40%.

US Dollar Rises as Currency Markets Turn Risk-Averse

The U.S. Dollar rose and riskier assets fell on Friday, as President-elect Joe Biden rolled out a $1.9 trillion stimulus plan that was offset by fresh U.S.-China tensions and a rise in COVID-19 infections in China. The move helped the greenback post its biggest weekly gain since November 2020, with its recent recovery from three-year lows challenging the narrative of dollar bearishness for 2021.

A nearly two-month long break in the U.S. Dollar was one of the catalysts behind the huge surge in crude oil prices since late October, so it makes sense that a stronger dollar would be one of the factors encouraging bulls to trim long positions at current price levels.

Bearish Factors Piling Up

Besides the stronger U.S. Dollar, crude oil bulls were disturbed by weak U.S. economic data that could weigh on future demand. U.S. consumer sentiment came in below expectations in January and other economic data such as sluggish retail sales and producer prices also pointed toward the possibility of weaker demand especially for gasoline.

As the country faces obstacles related to rising coronavirus cases, President-elect Joe Biden said he will ask Congress for $1.9 trillion to fund immediate relief for the U.S. economy that has been devastated by the pandemic. However, traders reacted to this news with trepidation, questioning how easily Democrats will be able to get their proposals through the Senate. The large price tag and inclusion of initiatives opposed by many Republicans set up the relief package for a drawn out battle in the Senate.

US Drillers Add Oil and Gas Rigs for 8th Week in a Row – Baker Hughes

U.S. energy firms last week added oil and natural gas rigs for an eighth week in a row as crude prices recover to their highest in nearly a year.

The oil and gas rig count, an early indicator of future output, rose 13 to 373 in the week to January 15, its highest since May, energy services firm Baker Hughes Co said in its closely followed report on Friday.

Those eight weeks of additions were the most since November when the rig count climbed for nine weeks in a row. Despite gains in recent months, that count was still 423 rigs, or 53%, below this time last year.

U.S. oil rigs rose 12 to 287 this week, their highest since May, while gas rigs gained one to 85, their highest since April, Baker Hughes data showed.

Short-Term Outlook

Technical and fundamental factors could continue to weigh on prices next week, but all we are expecting is a short-term pullback. The size of the break will be determined by the strength of the U.S. Dollar and the extent of the spread of COVID-19 cases in China.

Long-term bulls will likely welcome a sell-off into a value zone since crude oil prices are a little ahead of the fundamentals. Prices are trading at levels not seen in a year, but demand remains well below pre-pandemic levels.

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

Natural Gas Price Fundamental Daily Forecast – ‘Just Enough Cold’ Late January Fuels Short-Covering Rally

Natural gas futures closed higher on Friday after recovering from an early session loss. The market opened under pressure as overnight forecasts pointed toward a short-term warming trend, but prices turned up at the mid-session as volatile midday outlooks shifted back to expectations for a severe winter chill in late January that could trigger a surge in heating demand.

On Friday, March natural gas futures settled at $2.696, up $0.066 or +2.51%. The strong gains more than offset losses from the previous session that were fueled by forecasts calling for warmer temperatures.

Midday Weather Forecasts Reverse Early Session Weakness

“We finally see a colder pattern arrive here as we head into late month” focused on central and western portions of the lower 48, “but with some cold bleeding eastward” under a North Atlantic Oscillation block in the Atlantic, Bespoke Weather Services said.

“Because the strongest cold looks to focus back from the Plains to the Pacific Northwest, it’s not an extreme pattern to the cold side in terms of national demand, but it’s easily the coldest we have seen all season long,” the firm added. “We continue to believe this can give us a couple of colder weeks before potentially moderating after the first week or so of February.”

Cash Prices Advance

Natural Gas Intelligence (NGI) reported that spot gas prices advanced Friday after a bout of harsh winter weather in the upper reaches of the central United States.

“Blizzard conditions blanketed much of the Upper Midwest late Thursday and into Friday, and forecasters said the weather system, bringing both rain and snow, was expected to extend from the Great Lakes to portions of the East over the weekend,” NGI wrote.

“Prices in the Northeast surged Friday and led the overall gains. Algonquin Citygate spiked $2.185 day/day to average $5.205 and PNGTS jumped 79.5 cents to $4.990,” according to NGI.

‘Price gains generally were much more modest in other regions. In the Rocky Mountains, CIG picked up 5.5 cents to $2.635, while in Appalachia, Columbia Gas climbed 5.0 cents to $2.580. Out West, there were a few hubs that lost ground. SoCal Citygate shed 12.5 cents to $3.260, while El Paso S. Mainline/N. Baja dropped 6.0 cents to $2.830,” NGI reported.

Daily March Natural Gas

Short-Term Outlook

Friday’s overall gains aside, looking ahead to the third week of January, temperatures were expected to be above normal outside of the northern Plains and interior West, NatGasWeather said on Friday. “With high pressure ruling most of the rest of the United States,” national heating degree days “will be much lighter than normal.”

NatGasWeather experts went on to say that gas prices may have to wait until late January and the anticipated widespread surge in cold to generate and sustain upward momentum.

Technically, the key support zone is $2.552 to $2.485. The major resistance zone is $2.794 to $2.918. The upper or Fibonacci level is a potential trigger point for an acceleration to the upside. Overcoming this level is not an automatic buy, traders still have to watch the price action and read the order flow if this level is taken out. If the volume isn’t there to support the move then overly aggressive longs could get caught in a bull trap.

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

Gold Price Futures (GC) Technical Analysis – Longer-Term Support Zone at $1780.50 – $1705.20 Next Target Area

Gold futures are down sharply on Friday and the market is headed for its second consecutive weekly loss as a surge in the U.S. Dollar dampened demand for the dollar-denominated asset. The dollar was on track to post its biggest weekly gain against a basket of major currencies since October 2020.

At 21:32 GMT, February Comex gold futures are trading $1825.70, down $25.70 or -1.39%.

Traders said one catalyst behind the strength in the U.S. Dollar was data showing the COVID-19 pandemic’s continuing toll on the economy, which boosted the dollar’s appeal as a safe-haven asset.

Daily February Comex Gold

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1817.10 will signal a resumption of the downtrend. The main trend will change to up on a move through $1962.50.

The minor trend is also down. The minor trend will change to up on a move through $1864.00. This will also shift momentum to the upside.

The short-term range is $1767.20 to $1962.50. Its 50% level at $1864.90 is resistance.

The minor range is $1962.50 to $1817.10. Its 50% level at $1889.80 is another potential resistance level.

The next downside target is a major long-term retracement zone at $1780.50 to $1705.20.

Short-Term Outlook

Given the downtrend and the downside momentum, we think the gold market is headed for a retest of the long-term 50% to 61.8% retracement zone at $1780.50 to $1705.20. This zone stopped the selling at $1767.20 on November 30.

On the upside, the series of lower tops since last year’s top at $2099.20 is pretty clear. They come in at $2032.50, $2008.50, $1991.60, $1973.30 and $1962.50. Unless the buying is strong enough to overcome these levels, we should continue to see downside pressure.

Long-term traders are looking for value so we could see buyers step in on a test of $1780.50 to $1705.20. They are banking of the Fed to keep interest rates at historically low levels until at least 2023.

Short-term traders are getting punished, however, by rising U.S. Treasury yields. Over the short-run, gold should remain under pressure as long as yields remain attractive enough to draw investment capital away from non-yielding gold.

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

Crude Oil Price Update – Minor Trend Turns Down as Traders Eye $50.63 Target

U.S. West Texas Intermediate crude oil futures are under pressure late Friday as mounting coronavirus cases globally raised demand concerns, although this week’s drawdown in U.S. crude stocks limited losses along with Saudi Arabia’s promise to cut output by a million barrels per day in February and March.

At 20:02 GMT, March WTI crude oil futures are trading $52.36, down $1.26 or -2.35%.

In other news, U.S. energy firms this week added oil and natural gas rigs for an eighth week in a row as crude prices recover to their highest in nearly a year. The oil and gas rig count, an early indicator of future output, rose 13 to 373 in the week to January 15, its highest since May, energy services firm Baker Hughes Co said in its closely followed report on Friday.

Daily March WTI Crude Oil

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum has been trending lower since the formation of a closing price reversal top on Wednesday.

A trade through $53.94 will negate the closing price reversal top and signal a resumption of the uptrend. The main trend will change to down on a move through $47.31.

The minor trend is down. It turned down when sellers took out $52.30 earlier today. The move confirmed the shift in momentum to down.

The minor range is $53.94 to $51.89. Its 50% level at $52.92 is potential resistance.

The short-term range is $47.31 to $53.94. Its 50% level at $50.63 is the nearest downside target and potential support. Since the main trend is up, buyers could come in on a test of this level.

Short-Term Outlook

The direction of the March WTI crude oil futures contract into the close will be determined by trader reaction to $52.92.

Bearish Scenario

A sustained move under $52.92 will indicate the presence of sellers. If the selling is strong enough to take out the intraday low at $51.89 then look for a possible extension of the move into $50.63.

Bullish Scenario

Recovering $52.92 will signal the presence of buyers. If this move is able to generate enough upside momentum then look for a test of $53.94.

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

Natural Gas Price Prediction – Prices Rise on Colder Weather Forecast

 

Natural gas prices moved higher on Friday, recovering Thursday’s losses following a larger than expected draw in natural gas inventories. The weather is expected to become colder than normal throughout the United States’ northern portion, potentially bringing a ridge trough pattern that would bring cold weather. Natuaral gas production is expected to fall 2% in 2021 according to the latest Short-term energy outlook from the EIA.

Technical analysis

Natural gas prices moved higher  on Friday, recovering back through the 10-day moving average near 2.71. The resistance is seen near the 50-day moving average at 2.74. Short-term momentum has reversed and turned positive as the fast stochastic generated a crossover buy signal.. Medium-term positive momentum is decelerating. The MACD (moving average convergence divergence) histogram is printing in positive territory with a declining trajectory which points to consolidation.

U.S. Prodution will Decline in 2021

EIA estimates that the annual U.S. gas production for 2021 will fall 2% and average 96.2 billion cubic feet per day. However, in 2022, EIA estimates that natural gas production will rise by 2% compared with year-ending 2021 production of 98.2 Bcf per day, accompanied by rising natural gas prices. The United States set annual natural gas production records in 2018 and 2019, largely based on increased drilling in shale and tight oil formations. This increased production led to higher volumes of natural gas in storage and decreased natural gas prices. In 2020, the supply and demand contraction resulting from the COVID-19 pandemic resulted in marketed natural gas production decreasing by 2% from 2019 levels.

Gold Price Prediction – Price Slide as the Dollar Rallies Despite Weak U.S. Retail Sales

 

Gold prices dropped on Friday as the dollar gained traction while U.S. yields fell. This decline followed a weaker than expected U.S. retail sales report and December PPI, which was in line with expectations. After breaking out earlier in the month, gold prices have reversed course and are poised to test target support.

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Technical analysis

Gold prices slide on Friday and are testing an upward sloping trend line that comes in near 1,825. A close below this level would lead to a test of the November lows at 1,764. Short-term momentum has reversed and turned negative as the fast stochastic generated a crossover sell signal. The current reading on the fast stochastic is 16, below the oversold trigger level of 20. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) line generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line). The MACD histogram is printing in the red with a downward sloping trajectory, which points to lower prices. The RSI also broke down which reflects accelerating negative momentum.

Retail Sales Fall

U.S. retail sales dropped in  December as lockdowns to battle the spread of COVID-19 undercut spending. According to the U.S. Commerce Department, Retail sales dropped 0.7% last month. Data for November was revised down to show sales declining 1.4% instead of 1.1% as previously reported. Expectations had been for retail sales to be unchanged in December.

Crude Oil Weekly Price Forecast – Crude Oil Shows Signs of Exhaustion

WTI Crude Oil

The West Texas Intermediate Crude Oil market initially tried to rally during the course of the week, only to fall and form a bit of a shooting star. The shooting star suggests that we are going to perhaps pull back, reaching towards the $50 level. Underneath there, then the $47.50 level could be a target as well. In general, this is a market that I think will continue to attract a certain amount of attention due to the fact that it had been so bullish. However, when you look at the longer-term chart you can see that the $55 level in that general vicinity has caused a certain amount of distance. Ultimately, this is a market that I think has simply gotten ahead of itself.

WTI Oil Video 18.01.21

Brent

Brent markets also tried to rally a bit during the course of the week, but then gave back a significant strength. The 200 week EMA has offered resistance as well, so I think we could pull back a couple of dollars here in order to trying to find support. If we break down below the $50 level, then it is likely that we could go lower at that point. Pay attention to the US dollar, because if it does start to strengthen from a longer-term standpoint, that could really put a pummeling on the crude oil markets.

After all, this has nothing to do with demand, and everything to do with stimulus and currency devaluation in the United States. Ultimately, the market has a lot of searching to do for any real demand, and it should be noted that as price continues to rise, shale producers in the United States will put pressure on the oil market.

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

Crude Oil Price Forecast – Crude Oil Markets Pull Back on Friday

WTI Crude Oil

The West Texas Intermediate Crude Oil markets have pulled back during the trading session on Friday to end the week on the back foot. Ultimately, the market is looking likely to pull back a bit further, simply because we have gotten overextended. Ultimately, the market is reacting to the US dollar strengthening, and of course the idea that perhaps the stimulus package in the United States may not be as big as once thought. Quite frankly, the demand for crude oil is not anywhere near as strong as the charts suggests, as I had mentioned over the previous couple of days. Nonetheless, I would not be a seller. I think we may find buying opportunities closer to the $50 level.

Crude Oil Video 18.01.21

Brent

Brent markets pulled back towards the $55 level, which of course is a large, round, psychologically significant figure, but if we were to break down below there, it is likely that the market could go down to the $52.50 level. We are still very much in an uptrend though, and the 50 day EMA is testing the $50 level, so that should be your “floor the market.” Ultimately, pay attention to the US dollar because it is more than likely going to be one of the bigger problems with this market. I am not ready to start selling yet, but I certainly would not step in and buy it right away. I think you probably get an opportunity to play some type of bounce underneath, based upon stimulus and perhaps a weakening US dollar. As far as demand is concerned, I do not think that has anything to do with this going on here.

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

Natural Gas Price Forecast – Natural Gas Pulls Back From Same Level

Natural gas markets initially rallied during the trading session on Friday only to turn around and show signs of exhaustion near the $2.80 level. At this point, the market is sitting at the 50 day EMA, and therefore it is likely to pay close attention to this area. That being said though, the market is likely to continue going lower based upon the fact that this is the wrong time of year for buyers to be looking to get into natural gas, because quite frankly the demand will start dropping.

NATGAS Video 18.01.21

When you look at this chart, it is easy to see that there is a significant amount of resistance above extending from the $2.80 level to the $3.00 level. Ultimately, I think that rallies that show signs of exhaustion will continue to be sold into, as the market has struggled to continue to go forward. I think ultimately the market is likely to go down to the 200 day EMA which is near the $2.48 level. After that, the market then could go down to the $2.40 level. All things being equal, I like the idea of fading any short-term signs of strength, because given enough time I think the market will probably look towards the $2.00 level underneath, based upon longer-term charts.

After all, we have more than enough natural gas out there and therefore it is going to be difficult to get through the massive amounts of supply, so I think this continues to be a longer-term bearish market going forward. I have no interest in buying this market, because quite frankly I cannot even come up with the wish that area.

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

Silver Weekly Price Forecast – Silver Markets Choppy

Silver markets have gone back and forth during the course of the week, showing signs of choppiness and indecision. By doing so, this suggests that the market is simply focusing on whether or not there is enough stimulus out there, as later in the week there were concerns about whether or not Joe Biden could get a $1.9 trillion stimulus package through Congress. Silver will move back and forth based upon these expectations, but there is still a lot of support underneath and therefore I do not have any interest in shorting silver until we break down below the 50 week EMA, or essentially the $22 level. This means that we could continue to go lower in the short term, but I do think longer term we will continue to see buyers attracted to the precious metals markets.

SILVER Video 18.01.21

The $26 level is resistance above, and I think that if we can break above there then it could open up a move towards the top of the candlestick from the previous week, reaching towards the $28 level. If we can break above there, then it is likely that the market could go towards the $30 level. Once we break that level, then this market is ready to go much higher. I think we will continue to see noise over the next couple of weeks but from a longer-term standpoint I truly like silver a lot. In fact, I not only have been trading silver in the futures market, but I have been buying physical silver as well.

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

Natural Gas Weekly Price Forecast – Continue to Find Sellers Above

Natural gas markets have tried to rally a bit during the course of the week but gave back the gains near the $2.80 level. We have not quite formed a shooting star, but it certainly suggests something similar. Ultimately, we are getting close to the warmer time of year that will cause demand for natural gas to plummet overall. That being said though, the market will continue to look at the possibility of stimulus pushing demand higher, but at this point in time there is so much out there in the way of supply that it is difficult to imagine that natural gas will simply take off to the upside for a bigger move. All things being equal, this is a market that I think will offer selling opportunities given enough time.

NATGAS Video 18.01.21

As we roll into the spring, the market is likely to go looking towards the $2.25 level, possibly the $2.00 level underneath. That is an area that previously had been resistance, so it should be supported, not only do to that, but the fact that it is a large, round, psychologically significant figure. Furthermore, we have the 200 and the 50 week EMA indicators slicing through this general vicinity that we are at right now, so I think that causes a little bit of technical noise to begin with.

I have no interest in buying natural gas, at least not this time a year as we are in the wrong part of the year to expect massive amounts of demand. After all, we are already trading the February contract, and it is only a couple of weeks before we roll over to the March contract.

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

Gold Weekly Price Forecast – Gold Markets Trying to Stabilize

Gold markets have had a little bit of a rough week, as traders continue to determine whether or not there is going to be a significant stimulus package coming out the United States. Ultimately, there will be but there has been some questioning of the size of the stimulus package, perhaps not as big as the $1.9 trillion that Joe Biden is hoping to achieve. If that is going to be the case, then it makes quite a bit of sense that the market is still kind of treading water in general, trying to figure out what to do next. I believe that the 50 week EMA underneath will offer a significant amount of support, and I do think that eventually we will go looking towards the top of the weekly candlestick from the previous week. This does not mean that it is easy to get there though.

Gold Price Predictions Video 18.01.20

Ultimately, this is a market that I think eventually will find buyers jumping into pick up gold “on the cheap”, due to the fact that there is a certain amount of stimulus coming from everywhere going forward, and it certainly looks as if the $1750 level could be a massive support level as well. Furthermore, it would simply be a pullback and 38.2% on the Fibonacci retracement tool, which typically means that there should be quite a bit of momentum over the longer term to continue the trend. At this point, I would wait for some type of supportive candlestick in order to get involved, and then start aiming for the highs again. I do believe that this is what gold will do over the next year or so.

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

Silver Price Forecast – Silver Markets Plunge to End Week

Silver markets have initially tried to reach towards the $26 level but found resistance in that area. That being said, we have rolled over a bit to show signs of exhaustion. The market has not broken down below the massive candlestick from last week that showed significant selling pressure, and as a result it is likely that the market will probably find support underneath based upon previous action. That being said, the market has had a rough day on Friday, but when you look at the reasons, it is a bit more complex than simply pulling back from the $26 level.

SILVER Video 18.01.21

The 10 year notes started to cause havoc for traders in general, because rising interest rates would of course make the dollar a bit more attractive, and of course people are concerned about stimulus all of the sudden, as the size of the package may not be able to get through Congress. That being said, people are worried about the “size of the stimulus package”, and that of course could have the reflation trade going away, or perhaps more importantly simply being smaller.

Silver is a huge part of that, because not only is it a precious metal but it also has an industrial component built into it, so having said that it is likely that we will continue to see a lot of questions in general, and as a result it is likely that short-term pullbacks will continue to offer value from a longer-term standpoint, but at this point we are simply moving back and forth based upon the latest headlines as far as cheap money is concerned, which of course is typical for Wall Street.

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