Price of Gold Fundamental Daily Forecast – Poor U.S. Retail Sales Providing Support Along with Brexit, Trade Concerns

Gold futures are trading higher on Wednesday shortly after the cash market opening. The market has regained some of its upside momentum after rebounding from early session weakness. The catalysts behind the strength are lingering concerns over Brexit, pessimism over U.S.-China trade relations and weaker-than-expected U.S. economic data, which could mean an end of the month rate cut by the Fed.

At 12:57 GMT, December Comex gold is trading $1494.60, up $11.10 or +0.77%.

Renewed Brexit Worries

Gold is being underpinned this morning by renewed worries over Brexit after Tuesday’s optimistic outlook drove gold prices sharply lower.

On Tuesday, optimistic comments on Brexit from European negotiator Michel Barnier were backed up by reports that a draft legal text over the divorce was being drawn up.

“Our team(s) are working hard, and work has just started now today, this work has been intense over the weekend and yesterday, because even if the agreement will be difficult, more and more difficult, to be frank, it is still possible this week,” Barnier told reporters in Luxembourg on Tuesday morning.

He added that “any agreement must work for everyone,” saying it is “high time to turn good intentions into a legal text.”

By mid-afternoon (Tuesday), one report suggested that a draft deal was in the works according to two separate sources familiar with negotiations.

On Wednesday, traders aren’t so optimistic about a deal and are seeking protection in gold. This comes after “constructive” talks between the U.K. and the E.U. to get a Brexit deal, went on past midnight. Investors are still unclear if both parties can avoid postponing the U.K.’s departure from the EU on October 31.

U.S.-China Trade Relations Sour

There’s a little more tension between the United States and China on Wednesday, which is raising concerns over whether the two parties will reach even a partial trade agreement over the near-term.

This is stemming from reports that China is threatening “countermeasures” in response to the U.S. House of Representatives passing four pieces of legislation taking a hard line on Beijing for its violent response to protesters in Hong Kong.

U.S. Retail Sales Underperform

U.S. retail sales fell for the first time in seven months in September, raising fears that a slowdown in the American manufacturing sector could be starting to bleed into the consumer side of the economy. Furthermore, the disappointing report could help alter the split in the Federal Open Market Committee (FOMC) with more policymakers leaning toward a rate cut.

Daily Forecast

I’m looking for prices to remain underpinned unless an actual deal between the U.K. and the EU over Brexit is actually announced.  The U.S. and China seem far apart in their efforts to finish phase one of their partial trade agreement and the retail sales report is helping to support an end of October rate cut by the Fed.

Natural Gas Price Fundamental Daily Forecast – Traders Hunting for Stops Over $2.568 Amid Calls for Chilly Temps

Natural gas futures are edging higher for a fourth session on Wednesday, putting the market in a position to take out the two-week high and change the short-term trend to up.

Once again, the catalysts underpinning the market and driving out the weak short-sellers are stronger spot market prices amid forecasts pointing to chilly temperatures in store for the Great Lakes and Northeast late in the month.

At 12:50 GMT, December Natural Gas is trading $2.548, up $0.016 or +0.63%.

On Tuesday, the Global Forecast System (GFS) showed a “much colder pattern” compared to its European counterpart, and the midday GFS run trended even colder for late October, according to NatGasWeather.

“There remain three major periods of interest, starting with a cold shot currently sweeping across the northern U.S. for a bump in national demand,” the forecaster said. “This will be followed by national demand dropping below normal this weekend through early next week…but where the data is cold enough and bullish in most weather models is October 24-30 as a series of stronger cold shots advance deep into the U.S. with widespread lows of teens to 30s.”

Short-Term Weather Outlook

According to NatGasWeather for October 16-22, “A weather system with showers and cooling will sweep across the Midwest and Northeast the next few days with lows of 30s to 40s. Texas and the southern US will be mostly comfortable with highs of upper 60s to lower 80s, although locally hotter over the Southwest, South Texas, & Florida. High pressure and above normal temperatures will gain across the eastern half of the country this weekend with near perfect highs of 60s to 80s, while slightly cool over much of the West. Overall, decent demand the next few days, then lighter this weekend.”

Daily Forecast

The trend will change to up on a trade through $2.568, making this today’s upside target. Should a move through this level generate enough upside momentum, then with help from the “chilly” forecast, we could see an eventual surge into a 50% retracement level target at $2.636.

A failure to reach or blow through $2.568 will indicate traders are becoming concerned over Thursday’s government storage report that could show another triple digit build. However, since this is stale data and traders are more focused on the future weather, any correction is likely to be short-lived.

Crude Steadies, But Remains Under Pressure

Crude oil is showing little movement on Wednesday. In the European session, WTI is trading at $53.14, up $0.20, or 0.38%. Brent crude is trading at $58.91, down $0.06, or 0.10%.

Is a U.S-China Trade Deal at Hand?

Investors are keeping a close eye on trade talks between the U.S. and China. There has been some optimism that a limited deal (“Phase 1”) can be hammered out, which would be the first of up to three “mini agreements”. This would enable to sides to remove tariffs, while at the same time, postpone the most intractable issues for another time. If the sides can reach any kind of a deal, growth will improve and the demand for crude will increase. However, investor confidence slipped earlier in the week, as the Chinese media reported that China would demand further talks before agreeing to a Phase 1 agreement. The U.S. has sounded optimistic about reaching a deal, and has canceled tariffs which were set to take effect this week. A new 15% on $160 billion in Chinese goods is scheduled to take effect on December 15, but would likely be rescinded if the sides can reach an agreement before then. Traders should be prepared for further volatility from crude, depending on the progress of the current round of trade talks.

Crude Inventories – Another Surplus?

Another important factor for crude movement is the Energy Information Administration (EIA) crude inventory report. The weekly report has been posted four successive surpluses, pointing to an oversupply of U.S. crude. Another large surplus is expected on Thursday, with a forecast of 3.0 million barrels. This streak of surpluses is putting upward pressure on crude prices, and another surplus could push crude higher on Thursday.

WTI/USD 4-hour Chart

Oil Price Fundamental Daily Forecast – Underpinned by Upbeat Brexit News, but Gains Capped by Trade War Concerns

U.S. West Texas Intermediate and international-benchmark crude oil futures are trading nearly flat to slightly better on Wednesday, underpinned by optimism over Brexit and new signs that OPEC and its allies are willing to make further supply cuts, but pressured by renewed concerns over U.S.-China trade relations and potentially bearish weekly inventories reports.

At 11:54 GMT, December WTI crude oil is trading $53.04, up $0.16 or +0.30% and December Brent crude oil is at $58.71, down $0.03 or -0.05%.

Traders Hoping for Favorable Brexit Deal

Traders are optimistic that the European Union and the United Kingdom will strike a deal that avoids a “hard” or no-deal Brexit. This should boost economic growth and consequently oil growth and prices.

Early Tuesday optimistic comments on Brexit from European negotiator Michel Barnier were backed up by reports that a draft legal text over the divorce was being drawn up.

“Our team(s) are working hard, and work has just started now today, this work has been intense over the weekend and yesterday, because even if the agreement will be difficult, more and more difficult, to be frank, it is still possible this week,” Barnier told reporters in Luxembourg on Tuesday morning.

He added that “any agreement must work for everyone,” saying it is “high time to turn good intentions into a legal text.”

By mid-afternoon (Tuesday), one report suggested that a draft deal was in the works according to two separate sources familiar with negotiations.

Further Supply Curbs Possible

OPEC Secretary-General Mohammad Barkindo said OPEC “will do whatever (is) in its power” along with its allied producers to sustain oil market stability beyond 2020.

Daily Forecast

The markets are at a stalemate on Wednesday because of fading hopes of a trade deal between the United States and China after the latter threatened countermeasures against the U.S. for showing support for the Hong Kong protesters.

Traders are also looking for further developments over Brexit. A deal to allow the U.K. without hard ramifications should underpin prices.

Late in the session, the price action will be driven by the weekly inventories report from the American Petroleum Institute at 20:30 GMT. It is expected to show U.S. crude stocks probably grew for the fifth straight week, according to a Reuters survey.

The report has been delayed one day because of Monday’s U.S. bank holiday. The Energy Information Administration will report on Thursday.

Silver Dips to 2-Week Low as U.S-China Trade Talks Continue

Silver prices are lower on Wednesday, following the downward trend seen on Tuesday. In the European session, silver is trading at $17.27, down $0.14, or 0.80% on the day. Earlier in the day, the white metal slipped to $17.21, its lowest level since October 3.

Stocks Up, Silver Down

Risk appetite rose on Tuesday, as investors are somewhat optimistic that the U.S. and China will reach a limited trade agreement. The “Phase 1” deal would be the first of up to three mini-agreements, allowing the sides to postpone dealing with thorny issues such as forced technology transfers to another time. The Trump administration has canceled tariffs that were scheduled to take effect this week. Still, the U.S. has yet to remove a new 15% tariff scheduled to commence on December 15 on $160 billion worth of Chinese goods. Treasury Secretary Mnuchin said this week that he expects a deal to be reached, which would cancel those tariffs. Investors have responded by buying equities, while precious metals have lost ground. Silver prices have been fairly steady in the month of October, but that could quickly change, based on developments in the U.S-China talks.

There is added pressure on China to show more flexibility in the negotiations, as the Chinese economy has been the big loser in the trade war with the U.S. In September, Chinese exports to the U.S. declined by 22%, on an annualized basis. The Chinese manufacturing sector is sputtering, as the Chinese Manufacturing PMI has pointed to contraction for the past four months.

Silver Technical Analysis

Silver is currently showing some downward movement, but the metal has remained close to the 17.50 line for most of October. The 50-EMA is at 17.46, but it is the 200-EMA at 16.90 which could become relevant, if the downward movement continues. On the upside, the round number of 18.00 has remained intact since late September.  
XAG/USD 4-Hour Chart

Where Next for Oil After Its Double Reversal?

In yesterday’s Alert, we wrote the following:

Crude oil moved higher last week, especially on Thursday and Friday. This rally was in tune with the clear buy signals from the CCI and Stochastic indicators. While crude oil pulled back in today’s pre-market upswing, it’s unlikely that the rally is completely over at this time. Why? Because of two factors: one that we covered previously, and one that we didn’t cover so far.

The thing that we already discussed is the upside target based on the 38.2% Fibonacci retracement. It was not reached yet. Consequently, the price most likely has further to run.

The thing that we didn’t mention previously is the fact that crude oil just invalidated the breakdown below the rising dashed support line that’s based on the December 2018 and the August 2019 lows. Invalidations of breakdowns are bullish on their own. That’s yet another reason to expect the profits on the current crude oil long position to increase further.

The above generally remains up-to-date. The price of crude oil declined today and then rose back up and at the moment, our long positions are about $1.50 in the black. The question is whether we run for the hills because of this week’s decline, or do we wait for the price target to be reached.

The latter still appears to be the better idea. Applying the Fibonacci retracements to the October rally shows that today’s low formed almost exactly at the 61.8% Fibonacci retracement level. That’s the classic way for any asset to correct its preceding move and then to resume the trend. The short-term trend remains up, which means that the odds are that our target area will be reached.

One concerning matter is the situation in the USD Index. In the very recent past – the last several days – the USD Index and crude oil moved in the opposite ways. Thursday’s and Friday’s upswing in crude oil corresponded to declining USD. And the USD Index seems to be bottoming.

Then again, the relationship may be very short-lived and crude oil might be able to rally despite USD’s rally for a few days, anyway. After all, the USD Index is up at the moment of writing these words, and crude oil is almost done correcting its initial downswing.

Consequently, in our view, the current long position is justified from the risk-reward point of view.

If you enjoyed the above analysis and would like to receive daily premium follow-ups, we encourage you to sign up for our Oil Trading Alerts to also benefit from the trading action we describe – the moment it happens. Check more of our free articles on our website – just drop by and have a look. We encourage you to sign up for our daily newsletter, too – it’s free and if you don’t like it, you can unsubscribe with just 2 clicks. If you sign up today, you’ll also get 7 days of free access to our premium daily Gold & Silver Trading Alerts. Sign up for the free newsletter today!

Thank you.

Przemyslaw Radomski, CFA

Editor-in-chief, Gold & Silver Fund Manager

Sunshine Profits – Effective Investments through Diligence and Care


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 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, 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.

Gold, The Ultimate Safe Haven Asset. A Looming Nobel Prize?

2019 Nobel in Economics and Gold

Yesterday was a big day! At least for all those boring economists and similar bean-counters. The Nobel Prize in economics was awarded. Abhijit Banerjee, Esther Duflo, and Michael Kremer became 2019 laureates for their experimental approach to alleviating global poverty.

Nice! But, dear Nobel Committee, we also have great ideas how to reduce poverty in the world. Just give everyone some gold! We know, that’s not the quick road to wealth, but whatever the current outlook, gold portfolios should appreciate substantially in the long run.

Jokes aside, and let’s get serious. How about central banks stop printing money? You see, inflation is a silent wealth killer. Even a small rate of inflation, like the popular 2-percent target, means that prices double each generation (around 35 years). But in many developing countries, inflation rates are much higher, closer to 5 percent, which means that prices double each 14-15 years. Inflation is a great hit to real wealth. So, even if gold does not generate any yield, it can provide people a hedge against inflation (under the condition that inflation is not small or diminishing).

Or how about central banks stop keeping interest rates at ultralow levels? Yes, zero or even subzero interest rates are great for borrowers, but we doubt whether anyone attained wealth through indebtedness. If you are a company, you can leverage to finance your investments. But if one is a consumer and takes a loan to buy another luxury car, he is moving away from making a fortune. You cannot reach wealth except through hard work, savings and investments. Due to diminished compound interest, the ultralow interest rates reward saving much less, putting all savers in troubles.

For example, if a person saves $100 each month at 4 percent, then she will have $120,000 in forty years, but only $59,000 at 1 percent. Our saver would be about half poorer in forty years. Say goodbye to your happy retirement under the palm trees! Gold will not substitute your pension fund, but when added to portfolio, it can make it more resilient and profitable. The fact that gold usually shines during very low real interest rates, is a nice bonus!

Last but not least, how about stopping maintaining the flawed monetary system which generates business cycle and economic crises with all their disastrous consequences (think about high unemployment)? Luckily, the yellow metal can help in this regard as well. Even central banks begin to notice the exceptional features of gold… or, goud!

Dutch Central Bank Acknowledges the Unique Role of Gold

The De Nederlandsche Bank (DNB), which is the central bank of the Netherlands, has published a rather unusual note. The DNB pointed out that gold is the ultimate safe-haven asset, which always retains its value, crisis or no crisis:

Shares, bonds and other securities are not without risk, and prices can go down. But a bar of gold retains its value, even in times of crisis. That is why central banks, including DNB, have traditionally held considerable amounts of gold. Gold is the perfect piggy bank – it’s the anchor of trust for the financial system. If the system collapses, the gold stock can serve as a basis to build it up again. Gold bolsters confidence in the stability of the central bank’s balance sheet and creates a sense of security.

Isn’t it a shocking note? The respected central bank of a developed economy has finally acknowledged the possibility of the monetary system collapse. We hope that the timing of the publication does not reflect any insider knowledge about the state of the global monetary system… Or, gold bulls could actually keep their fingers crossed for it. And what is more: the DNB admitted that gold would be superior than financial assets during the hard reset! Finally, we can praise the central banks!

If you enjoyed the above analysis, we invite you to check out our other services. We provide detailed fundamental analyses of the gold market in our monthly Gold Market Overview reports and we provide daily Gold & Silver Trading Alerts with clear buy and sell signals. If you’re not ready to subscribe yet and are not on our gold mailing list yet, we urge you to sign up. It’s free and if you don’t like it, you can easily unsubscribe. Sign up today!

Disclaimer: Please note that the aim of the above analysis is to discuss the likely long-term impact of the featured phenomenon on the price of gold and this analysis does not indicate (nor does it aim to do so) whether gold is likely to move higher or lower in the short- or medium term. In order to determine the latter, many additional factors need to be considered (i.e. sentiment, chart patterns, cycles, indicators, ratios, self-similar patterns and more) and we are taking them into account (and discussing the short- and medium-term outlook) in our trading alerts.

Thank you.

Arkadiusz Sieron
Sunshine Profits‘ Gold News and Gold Market Overview Editor


Disclaimer 

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 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, 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.

Gold Cycle Forecast Signals Bottom is Near

Now that the $1550 level has been reached, we are expecting a rotation to levels that may reach just below the $1450 level before attempting to set up another momentum base/bottom formation.  And just like clockwork, Gold has followed our predictions and price is falling as we expected. Just look at our October 2018 chart where we forecasted the price of gold rallies and corrections along the way.

GOLD CYCLE FORECAST – DAILY CHART

Take a look at the most active cycles for gold and where our gold forecast is pointing to next. The downside rotation currently in Gold is likely not quite over yet and the gold mines will selloff the most.  This new momentum base should setup and complete once the gold cycles bottom.  The next upside price leg should push Gold well above the $1760~1780 level – so get ready for another big rally of 20%+.

GOLD MINERS SELL OFF – DAILY CHART

Unfortunately, so many traders are highly emotional and fall in love with positions in shiny metals or gold miner stock positions. Yet we all know if you trade on emotions or fall in love with a position, you are most likely to lose a ton of money. Two weeks ago I got so much flack from traders when I said gold miners were on the verge of a violent drop in price, then the bottom fell out and the dropped huge. Then last Thursday morning when gold, silver, and miners are trading up huge in pre-market and at the opening bell I warned it looked like a big fakeout and price could collapse for yet a second leg down and the same response from those emotional traders who love their positions and won’t sell them when they should as active traders.

HAVE YOU OUTPERFORMED GDXJ THIS YEAR?

If you like to trade in the precious metals sector then you most likely love to trade the gold miners ETF GDXJ. As you can see above GDXJ is only up 19.55% year to date. Sure, it’s a nice gain, but are you still holding your metals position knowing you just gave back most or all of your profits?

Being a technical analyst my focus is to only enter a position when the charts/analysis point to an immediate price advance or decline. I site in cash waiting for the next cycle top or bottom to form in an asset class like gold miners, gold, silver, or silver miners, and once the cycle starts I jump on the wave and ride it for the move until it shows signs that its weakening and will break. almost 50% of the year my portfolio is sitting in cash. And my average position only lasts around 12 days.

Take a look at all my precious metals related trades this year (2019) below. They are all winners, and total gain for subscribers of my Wealth Building Newsletter is 41.74% profit. More than double the return than if you were riding the GDXJ roller coaster for 9 months straight and all your money at risk.

My point here is that no matter how much you love metals (and I LOVE METALS), but you do not need to always be in a position in them. There are times to own, and times to watch with your money safely in cash.

CONCLUDING THOUGHTS:

The end result is that the fear and greed that is starting to show up in the precious metals markets may become an “unruly beast” if it continues to grow in strength and velocity.

Keep reading our research because our proprietary tools have been nailing all of these price targets and moves many months in advance.  The next bottom in metals should set up when our cycle bottoms – then the next upside leg will begin.  This time Gold should target $1800 and Silver should target $21 to $24.  This will be an incredible move higher if it plays out as we suspect.

I urge you visit my Wealth Building Newsletter and if you like what I offer, join me with the 1-year subscription to lock in the lowest rate possible and ride my coattails as I navigate these financial market and build wealth while others lose nearly everything they own during the next financial crisis. Join Now and Get a Free 1oz Silver Bar!

I can tell you that huge moves are about to start unfolding not only in metals, or stocks but globally and some of these supercycles are going to last years. A gentleman by the name of Brad Matheny goes into great detail with his simple to understand charts and guide about this. His financial market research is one of a kind and a real eye-opener. PDF guide: 2020 Cycles – The Greatest Opportunity Of Your Lifetime

Chris Vermeulen
www.TheTechnicalTraders.com

Global Equity Markets Roar

Third-quarter results for UnitedHealth group were better than expected and led it to raise profit guidance for the year, with similarly upbeat reports also from Johnson and Johnson and JPMorgan. European equities were mostly up, too. Gold struggle in the face of surging US bond yields and the general risk-on fervour 

Brexit

The Pound galloped higher overnight, leaving the currency around 4% stronger over the past week. RTE News’ Tom Connelly, who broke the original Brexit ‘deal’ story, writes that the EU and UK sides are the closest they have been and that there is some optimism now. He has Irish sources typically, so this is another positive sign.

European stocks rallied to levels not seen in more than a year as speculation that a Brexit deal is imminent prompted traders to scoop up shares across the board.
Of course, any ‘breakthrough’ between the EU and the UK must still face the British house parliament.

But traders remain favourably positioned for the ‘white smoke’ moment hoping for domestic ratification on Brexit.
Framing out the “feel good” risk-on vibe, the US-China trade discussions seem to be making some progress, and the prospect of a genuine truce has risen.
Asia open

While Asian cash market looks set to gain however entering the morning session, traders have hit the pause button possibly awaiting the outline of a Brexit agreement to judge the likelihood of parliamentary approval, which suggest there still much wood to be chopped before pen gets put to paper.

As well, investors are looking for more clarity around the various phases of the US-China trade talks. Individually, Chinas firm commitment to buy $50 billion in US farm goods, details around December tariff detente, possible first-level tariff rollbacks and any signs progress on lifting the US export ban on Huawei, yup lots of wood to chop there also.

Oil market

Crude fell for a second day amid a weakening global growth outlook and as US oil producers defensively hedge against copious crude supplies in the world’s largest economy.

Oil markets continued to struggle overnight under the weight of a dreary macro scrim as back to back miserable China data prints (bad trade data and factory gate inflation) were compounded by a Germany’s sickly ZEW survey which pressured prices.

However, a lower base is being tentatively held in check after OPEC Secretary-General Mohammad Barkindo reiterated his “whatever it takes” to sustain oil market stability mantra.

While corporate earnings reports and phase one of the US-China trade talks is buttressing general risk sentiment, without an implicit rollback of existing tariffs, a tariff detente will have minimal effects on shifting the global growth dial to a more pleasant setting and therefore limited impact on oil prices. In other words, a detente means things may not necessarily get worse, but it doesn’t suggest that global economic conditions will improve any time soon.

But the fact that the losses are very sticky at these downcast levels it could be another worrying sign for oil bulls.

Gold market

The robust US corporate earnings reports coupled with positive developments on the Brexit front has triggered a market rotation out of bonds into equities resulting in US 10-year bond yields significantly rising which is weighing on the opportunity cost of holding gold.

Roaring US equity markets and an upsurge in US bond yields are possibly two of the worst flatmates for gold; as a result, gold toppled nearly $20 top to bottom overnight.

Also, The NY Fed manufacturing survey lifted a better-than-expected 2pts in October, giving the hawks on the FOMC “something to talk about” and perhaps hawkishly influencing their October policy decision process.

Currency markets

Japanese Yen

The “Risk on” environment has propelled the USDJPY higher within reach of the psychological 109 level as the S&P 500 had a peak above the equally cerebral 3000 markers.

Australian Dollar

The market is still debating the RBA’s monetary policy gymnastics. But given the RBA Board is expressing some doubts about the efficacy of dropping rates further operating in what for the RBA is uncharted territory, it could mean slowing the pace of rate cuts but doesn’t necessarily alter their dovish bias. Despite a frothy global “risk-on” environment, the Aussie dollar is trading 20 pips off yesterday’s session tops.

The Yuan

The Yuan may remain stable within the current 7.05-7.10 level while the phase one trade deal gets chiselled out.

Back to back weaker economic data out of China (Trade and factory inflation gate) provided a stark reminder if not a reality check that a weaker Yuan from a pure fundamental landscape may still be in the cards. As such the USDCNH has traded with a better bid overnight.

But given there remains a strong possibility of a Phase 1 deal getting inked, at minimum USDRMB topside should remain capped and we could see the CNH outperform in the weeks ahead assuming phase 2 and 3 of the propose US-China trade deal comes to fruition.

This article was written by Stephen Innes, Asia Pacific Market Strategist at AxiTrader

Natural Gas Price Prediction – Prices Rise on Cool Weather Forecast

Natural gas prices surged another 2.5% on Tuesday. Tropical depression 15, forming in the Atlantic and there is one other storm that has less than a 10% chance of becoming a tropical cyclone. There is also one storm in the Gulf of Mexico with a 10% chance of becoming a tropical cyclone. The weather is expected to be colder than normal throughout most of the mid-west which could buoy natural gas heating demand.

Technical Analysis

Natural gas prices rallied sharply and is poised to test resistance near the October highs at 2.40. Support on natural gas is seen near the 10-day moving average at 2.28 and then the October lows at 2.18. Short term momentum has flipped and turned positive in oversold territory as the fast stochastic generated a crossover buy signal. Additionally, the current reading on the fast stochastic is 43, above the oversold trigger level of 20 and in the middle of the neutral range. The fast rebound in the fast stochastic reflects accelerating positive momentum. Medium-term momentum as turning and the MACD (moving average convergence divergence) is poised to generate a crossover buy signal.

Export Demand is Flat Week over Week

The Energy Information Administration reports that liquid natural gas exports are flat week over week. Eleven LNG vessels, according to the EIA, with a combined LNG-carrying capacity of 41 Bcf departed the United States between October 3 and October 9. One vessel was loading at the Sabine Pass LNG terminal on Wednesday. Net injections into storage totaled 98 Bcf for the week ending October 4, compared with the five-year average net injections of 89 Bcf and last year’s net injections of 91 Bcf during the same week.

Gold Price Prediction – Prices Slide as Positive Earnings Sentiment Buoys the Dollar and Weighs on Gold

Gold prices moved lower on Tuesday as the Chinese now seem to agree with phase one of the US-Chinese trade agreement. Trump and Xi are scheduled to meet on the sidelines of the APEC meeting in the middle of November. On the geopolitical front, Turkey and Syria remain in the headlines. After the US withdrew from northern Syria and Turkish forces moved in, the Kurds had no choice but to look to Syrian forces loyal to President Assad.  The US has now lost any voice in this conflict which is what President Trump likely wanted.

 

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Technical Analysis

Gold prices moved lower pushing down after Monday’s inside day. Prices are poised to test support which is seen near an upward sloping trend line that comes in near 1,473. Resistance is seen near the 10-day moving average at 1,496, and then a downward sloping trend line that comes in near 1,513. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. The fast stochastic is printing in the middle of the neutral range. Medium-term momentum has also turned negative. The MACD histogram is printing in the red with a declining trajectory which points to accelerating negative momentum and lower prices.

Positive Sentiment Weighs on Gold Prices

Gold prices lost ground as riskier assets gained traction. As stock prices move higher, US yields move in tandem. The higher yields reflect the market’s belief that the dark clouds that have covered any trade agreement could be getting lifted. Higher US yields and a weak European economy point to a stronger dollar which weighs on the price of the yellow metal. Better than expected earnings were released on Tuesday in the banking sector which buoys the US stock market, raising yields and pushing gold lower.

Silver Price Forecast – Silver Markets Continue To Consolidate

Silver markets are likely to continue to be very noisy, as the global economic situation is the same. If that’s going to be the case, then it makes quite a bit of sense that the market is essentially waiting to figure out how certain things play out, including not the least of which will be the US/China trade relations, Brexit, and of course central banks around the world cutting interest rates and liquefy the markets. As long as that’s going to be the reality, gold and silver both should get some type of bid.

SILVER Video 16.10.19

To the downside, the $17.00 level should offer a significant amount of support, as the market has certainly seen a strong reaction every time he gets close to that level. If we were to break down below there, then the 200 day EMA comes into play. The 200 day EMA is currently found at the $16.28 level, and obviously a longer-term signal could be formed if we were to break down below there.

To the upside, the $18 level is obvious resistance, opening up the door to the $18.75 level, and then possibly even the $19.75 level. I still believe in the value of silver though, and I do like buying short-term pullbacks as they give us an opportunity to take advantage of the longer-term trend. Central banks, geopolitical issues, and of course recessionary fear should continue to power this market higher. August was 15% in gains, and since then we have been pulling back slightly to perhaps bring sanity back to the market. That pullback is just about over.

Please let us know what you think in the comments below

Crude Oil Price Forecast – Crude Oil Markets Bounce Back

WTI Crude Oil

The WTI Crude Oil market initially fell during Tuesday but found enough support near the $52.50 level to turn around and form a supportive looking candle. Ultimately, what I find interesting about this is that we have seen quite a bit of buying pressure at $52.50 over the last week or so anyway, and of course the uptrend line underneath will have its influence as well. All things being equal, the $51 level kicks off significant support down to the $50 level, and therefore it makes sense that value hunters have come back into the market.

Oil Forecast Video 16.10.19

Brent

Brent markets also fell rather hard during the Tuesday session initially but has found support just as the WTI market has. Ultimately, this is a market that is probably getting a bit of a boost due to the fact that there are still tensions with the Iranians, and of course there’s also the possibility that the Brexit gets done and that could drive up demand in theory as well. Either way, there is significant support underneath, and that’s probably the most important thing to pay attention to. The 50 day EMA is close to the $60.75 level and breaking above there could open up the door to the $62.50 level, possibly even the $64 level after that. To the downside, I see the $56 level as the beginning of a massive amount of support that extends down to the $55 level. Ultimately, I believe that we are rallying from here to form a larger range.

Please let us know what you think in the comments below

Natural Gas Price Forecast – Natural Gas Markets Rally Again

Natural gas markets have shown signs of strengthening for the third day in a row, and now are clear of those wicks that had caused a bit of concern late last week. With that being the case, it looks as if the sellers are starting to get trapped and eventually that could spring the “Winter pop” that I’ve been looking for. The $2.20 level looks to be important, and as long as that’s going to be the case it’s likely that we will see buyers on dips in that general vicinity.

NATGAS Video 16.10.19

Ultimately, this market probably will try to return to the $2.70 level, but it may take some time to get there. What we need to see is some type of cold forecast in the United States to have people assuming there is going to be much more demand. That will eventually happen, and when it does it tends to be a very explosive move. Pullbacks at this point should continue to offer plenty of value, especially near the $2.20 level, which has been so stringently defended since we broke above there back in late August. Remember, we are trading the November contract and that tends to mean higher pricing. At this point, I still believe in buying pullbacks as natural gas should continue to find plenty of buyers at these extraordinarily low levels. This is a seasonal trade, so don’t get too buried into the trade with huge amounts of funds, but it is a way that I pad my account every year.

Please let us know what you think in the comments below

Gold Price Forecast – Gold Markets Continue To Test Wedge

Gold markets have been a bit negative during the trading session again during the day on Tuesday but has also continued to see buyers at the uptrend line that I have marked on the chart. With that being the case it makes sense that we are going to continue the overall move to the upside, and therefore it’s likely that the market will continue to be attracted to the $1500 level, which is a bit of a fulcrum and essentially “fair value” for this market. Overall, this is a market that also features the 50 day EMA right through the last couple of candles, so I think that we are getting a lot of “push/pull” and therefore it’s likely that we will eventually try to reach to the upside. However, breaking down below that uptrend line could change a lot of things.

Gold Technical Analysis Video 16.10.19

If we were to break down below that uptrend line, then the $1450 level is very likely to be an area where we could see a bit of support as well. Below there, then you are starting to talk about reaching down towards the 200 day EMA. That being said, I am not a huge fan of shorting Gold at this point.

All things being equal, there is a lot of different pieces out there that could continue to push gold higher, not the least of which is the fact that the central banks around the world continue to cut interest rates and of course liquefy the marketplace. With that in mind, and of course a lot of concerns with the US/China trade situation and the global slowdown, goal should continue to attract quite a bit of money, even though lately it has been a bit rough.

Please let us know what you think in the comments below

Gold Price Forecast – The Next Buying Opportunity

Overall, this is just a normal cycle correction in a new bull market – prices should bottom in November or December.

If you study the markets long enough, you’ll begin to recognize a cyclical nature to virtually everything. Financial assets rise and fall with the business cycle. Agricultural commodities are subject to weather patterns and drought. In gold, you’ll notice prices seem to base about every 6-months.

THE GOLD CYCLE

Below is a weekly chart of gold from 2007 to 2012. The blue arrows represent each 6-month bottom. Not every cycle is equal, but there is a definite cadence to the lows. In bull markets, prices make higher lows.

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The correction into each 6-month low is usually filled with a few twists and turns. Typically, you can divide the entire correction process into four stages.

  • Stage 1 (The Cycle Top): Gold has rallied at this point for several weeks; bullish sentiment is high. However, a more in-depth look reveals weakening underlying momentum portrayed by negative divergences in the MACD and RSI. Eventually, prices peak, and we mark the cycle high.
  • Stage 2 (The Topping Process): The uptrend is showing signs of weakness, but it’s unclear if prices topped. Sentiment remains firmly bullish with most traders still positioning for new highs – many overleveraged. However, the market is running out of buyers – rallies decay and prices fail to maintain new highs.
  • Stage 3 (A Top Acknowledged): After a couple of failed rallies, bullish sentiment begins to wane. The bears, once timid, start to grow in confidence. It’s at this point we can see a sharp down day as overleveraged traders acknowledge a trend reversal (sometimes all at once) and race to the exits. The bulls stop looking for new highs and begin looking lower.
  • Stage 4 (The 6-Month Low): Prices have declined long enough and deep enough to drive sentiment from bullish back to bearish. Everyone that was expecting new highs at the top is now calling for new lows – some are even shorting the market. Our Gold Cycle Indicator is below 100 and in bottoming territory. Ideally, we’ve seen at least a 50% reduction in commercial net-shorts from the peak.

THE CURRENT CYCLE

I believe we will transition into stage three (described above) once gold breaks the October $1465 low. Commercial net-shorts remain elevated at -310,492. Our Gold Cycle Indicator (currently 237) should dip below 100 when conditions are consistent with minimum cycle bottoming.

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After this cycle bottoms, a new sequence begins – rinse and repeat. Some corrections are more profound than others, while some are unusually shallow. The market throws a curveball occasionally, to keep traders on their toes. We have a minimum target of $1410 – $1420 and see the potential for a backtest of the June $1380 breakout area.

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 https://goldpredict.com/

Crude Steady as Investors Eye U.S-China Trade Talks

Crude oil is showing limited movement on Tuesday. In the European session, WTI is trading at $53.37, down $0.14, or 0.26%. Brent crude is trading at $59.18, down $0.04, or 0.02%. U.S. crude oil posted a late-week rally, climbing over 5%. However, the rally fizzled out, as crude reversed directions on Monday and dropped below the $53 level earlier on Tuesday.

Trade Deal Optimism on Hold

The ongoing trade war between China and the U.S. has taken a toll on both economies and contributed to weaker global growth. Recent figures show that the Chinese economy has been hit hard, which may force the Chinese to show some flexibility in the current round of talks between the sides. In September, Chinese exports to the U.S. declined by 22%, on an annualized basis. The Chinese manufacturing sector is sputtering, as the Chinese Manufacturing PMI has pointed to contraction for the past four months.

The markets were brimming with optimism last week, as the U.S. and China renewed trade talks after a long break. Previous rounds of negotiations have ended without success, but these talks are taking a different approach, with a focus on achieving a limited deal, which is being labeled “Phase 1”. The aim is to reach a partial agreement and leave thorny issues such as intellectual property theft for another day. However, China is saying that additional talks will be needed before a limited agreement is reached. In the meantime, the Trump administration suspended higher tariffs which were set to take effect this week. Still, tariffs that are scheduled to take effect in December remain in place. The level of progress in these talks can have a significant effect on crude prices, since a trade agreement between the two largest economies in the world would re-energize the world economy and increase demand for crude from China and other major economies.

WTI/USD 4-hour Chart

Price of Gold Fundamental Daily Forecast – Just Enough Concern Over Trade Deal to Underpin Prices

Gold futures are edging higher on Tuesday amid concerns over U.S.-China trade relations. Lower U.S. Treasury yields are helping to underpin prices, while gains are being capped by increased demand for risky assets and a firmer U.S. Dollar. Traders are also attributing the early strength to dampened hopes of a prolonged trade deal between the United States and China, and ahead of a summit that will determine how Britain leaves the European Union.

At 12:21, December Comex gold is trading $1497.90, up 0.30 or +0.035.

The lukewarm response to phase one of the trade deal continues to encourage gold bulls to hang on to their long positions. However, this isn’t really bullish news either. It seems to be just enough to prevent the market from collapsing like it did last week.

At the same time, the fact that the two sides keep talking is helping to keep a lid on prices with some saying the threat of a more permanent deal being signed at any time over the next few weeks is enough to keep even the strongest bulls from adding to their long positions.

The Brexit narrative is also playing with investor sentiment ahead of the make-or-break summit between Britain and the European Union on Thursday and Friday that will determine whether Britain is headed for a deal to leave the bloc on October 31, a disorderly no-deal exit or a delay.

Daily Forecast

There are no major economic releases in the United States on Tuesday, but it is the start of earnings season on Wall Street. Although most analysts are forecasting a weak earnings season, today’s session started with a bang with a number of major companies posting big earnings beats.

Stronger-than-expected reports could help boost stock prices, which could put some pressure on demand for gold.

Traders are also monitoring the situation in the Middle East after the U.S. decided to stop trade negotiations with Turkey and raised steel prices to 50%. Gold could find support if the situation escalates in the area.

Oil Price Fundamental Daily Forecast – Choppy Trade Expected as US-China Hammer Out Details of Trade Deal

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading lower on Tuesday, after clawing back most of its early session losses. The catalyst behind the second day of weakness is worry over U.S.-China trade relations that is raising concerns over the weakening global economy and declining demand growth.

At 11:55 GMT, December WTI crude oil is at $53.29, down $0.36 or -0.68% and December Brent crude oil is at $59.04, down $0.31 or -0.56%.

Weak data from China is also pressuring prices. Earlier on Tuesday, the National Bureau of Statistics (NBS) reported that China’s factory gate prices declined at the fastest pace in more than three years in September. That follows customs data on Monday that showed Chinese imports had contracted for a fifth straight month.

On Friday, the announcement of a partial trade deal between the United States and China helped boost prices, but these gains were erased on Monday when China said it wanted to continue discussions before agreeing to the first phase of the deal. This news rekindled concerns over demand ground.

However, the market did get a slight boost on Tuesday after OPEC Secretary-General Mohammad Barkindo said OPEC and its allies “will do whatever (is) in its power” to sustain oil market stability beyond 2020.

Rising tensions in the Middle East are also providing some support on concerns over a possible support disruption after President Trump imposed sanctions on Turkey and demanded the NATO ally stop a military incursion in northeast Syria that is rapidly reshaping the battlefield of the world’s deadliest ongoing war.

According to CNBC, the move highlights increasing instability in the Middle East amid months of attacks on tankers and oil sites in and around the oil-exporting Gulf region.

Daily Forecast

It seems U.S.-China trade relations will be the main focus for traders for several weeks or until the two economic powerhouses sign the “Phase One” trade agreement. So expect a volatile two-sided trade.

Short-term investors will be watching U.S. inventories. Prices could get a boost this week as investors are expecting a drawdown in crude inventories in the United States.

This week’s American Petroleum Institute (API) and U.S. Energy Information Administration (EIA) inventories reports are expected to show a slight draw down.

Natural Gas Price Fundamental Daily Forecast – Traders Await Further Confirmation of Late October Cold Spell

Natural gas futures are inching lower early Tuesday after failing to follow-through to the upside overnight, following two days of higher gains. It’s probably too early to pass judgment on the price action, which is suggesting investor indication and impending volatility.

The market could also be going through a transition period after last week’s steep sell-off as weather models show colder temperatures arriving in late October. Buyers are being a little tentative, however, because they aren’t sure if the weather pattern is indicating a “cold snap” or something more pronounced.

The catalysts underpinning the market are stronger spot market prices amid forecasts pointing to cooler temperatures in store for the Great Lakes and Northeast later this week.

Additionally, guidance from both the American and European models reflected a colder pattern in the 11-to-15 day period, according to Bespoke Weather Services.

At 11:47 GMT, December natural gas is trading $2.504, up $0.006 or +0.24%.

Short-Term Weather Outlook

According to NatGasWeather for October 15-21, “A strong cool shot will sweep across the Midwest the next few days after tracking out of the Rockies and Plains with lows of 20s and 30s. Texas and the southern US will be mostly comfortable with highs of upper 60s to lower 80s, although locally hotter over the Southwest, South Texas & Florida. The West will see a mix of weather systems and warm breaks, coolest Northwest with 50s and 60s, while hottest over California and the Southwest with 70s to near 90 Fahrenheit. Overall, stronger demand this week compared to last week due to cooling across the North.”

Mid-Term Weather Outlook

Bespoke chief meteorologist Brian Lovern said, “…models appear to be bringing a wave of tropical forcing out toward the central Pacific, allowing a warmer ridge to develop in the West, sending a colder trough into the eastern half of the nation. The bulk of the forcing hands back over the Indian Ocean, however, and without blocking in place, it is possible that this colder push is simply another transient one.”

Daily Forecast

The shift in the weather pattern has been just enough so far to chase out a few of the weaker shorts. The stronger short-sellers want to see stronger evidence of a prolonged cold spell.

“Even with the colder trends over the weekend, gas-weighted degree day totals over the next 15 days are still on track to fall below normal,” Bespoke said.

“We respect the model output but want to see more in order to be convinced that this is a fundamental shift in base state toward higher than normal demand, as opposed to just another window of variability,” Bespoke chief meteorologist Brian Lovern said.

The daily chart indicates the direction of the market on Tuesday will likely be determined by trader reaction to a minor 50% level at $2.278. Holding above it will indicate the short-covering is getting stronger.