Price of Gold Fundamental Daily Forecast – Struggling Against Firm US Dollar

Gold futures are trading flat early Tuesday after posting a technical reversal the previous session following a test of its lowest level since August 11. With the trend down, the price action probably reflected short-covering and position-squaring since the bearish traders have to get out of the way before the real buyers can gain control. In other words, gold went up because weak short decided to bailout, not because of the presence of strong buyers.

At 03:13 GMT, December Comex gold traders are trading $1763.90, up $0.10 or +0.01%.

Monday’s short-covering rally was likely fueled by a dip in Treasury yields and some hedge buying tied to the steep sell-off in the global equity markets. The strong U.S. Dollar likely put a lid on the rally.

Gold did not go up because it is a safe-have asset. Gold is an investment, not a safe-haven. That’s old school thinking. The true safe-havens are U.S. Treasurys, the U.S. Dollar and the Japanese Yen. When there’s trouble like potential contagion from the financial turmoil coming out of China, investors want safety and liquidity. To some, gold is a safe-haven, but the liquidity can’t compare to the Treasury and foreign currency markets.

A few weeks ago I read some analysis on FXEmpire.com where a fellow was saying gold would rally during an upcoming stock market crash. On September 2, the benchmark S&P 500 Index hit an all-time high of 4545.85. On September 20, it reached a low of 4305.91. This is a 5.28% loss. On September 3, December Comex gold hit a high of $1836.90. On September 20, it hit a low of $1742.30. This is a 5.15% loss. So if you do the math, gold has outperformed the S&P 500 Index since September 3.

I’m being sarcastic, of course. My point is, the direction of gold is controlled by interest rates and at time the U.S. Dollar. Gold tends to react to stock market crashes when the Federal Reserve floods the financial system with massive amounts of liquidity. I don’t they’re going to do that now just one-day before the start of a two-day meeting where they will be discussing whether to begin pulling liquidity out of the market.

So if gold rallies from current price levels, the move will likely be fueled by short-covering and position-squaring. If the stock market drops another 5 to 10% over a short period of time, the Fed may have to do something, but they don’t have a lot of tools left in their toolbox with interest rates already sitting near zero.

The chances of a powerful gold rally are slim because I don’t think the Fed will lower rates because they can’t and I don’t think they are going to increase their bond purchases to provide more liquidity because they are close to reducing their massive stimulus program. At best, the Fed will leave its bond purchases at current price levels and take a pass on tapering until later in the year when the stock market could be more stable.

Even if gold does pop to the upside, it’s likely to be another shorting opportunity.

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

Gold Recovers as Worldwide Equites Sell Off

The worldwide equity selloff began overseas and then continued into the U.S. equities markets. At its low today the Dow Jones industrial average was down 900 points before recovering. The Dow gave up 614 points in trading today and closed at 33,970.47, resulting in a net decline of 1.78%. The NASDAQ composite lost 2.19% and is currently fixed at 14,713.9030. The S&P 500 lost 1.70% and is currently fixed at 4357.73.

gold sept 20

As of 5:56 PM EDT gold futures basis, the most active December 2021 contract is currently up to $13.30 and fixed at $1764.70. Silver did sustain a mild selloff closing lower by 0.41%, and after factoring in today’s decline of a little over nine cents, it is currently fixed at $22.245.

silver sept 20

Reuters reported that “Wall Street plunged on Monday as fear of contagion from a potential collapse of China’s Evergrande prompted a broad selloff and sent investors fleeing equities for safety.”

They also added that “the equity selloff in the United States was a result of concerns of solvency of the Chinese property group Evergrande. “Gold rose on Monday as fears about the solvency of Chinese property group Evergrande sparked a flight to safe-haven assets, but gains were capped by strength in the dollar ahead of the U.S. Federal Reserve’s policy meeting. Spot gold rose 0.5% to $1,762.66 per ounce by 1753 GMT. U.S. gold futures settled 0.8% higher at $1,765.40.”

The Chinese property to developers has accumulated over $300 billion in debt mostly with the Central Bank of China.

The Federal Reserve will meet tomorrow and begin September’s FOMC meeting, which will conclude on Wednesday. Market participants and traders hope to gain more clarity as to the timeline in which the Federal Reserve will begin to taper their monthly asset purchases of $120 billion (80 billion in U.S. debt and 40 billion in mortgage-backed securities).

There is genuine uncertainty as to what actions the Federal Reserve will take in regards to their current monthly asset purchases. Their asset balance sheet has swelled to above $8 trillion in assets. However, their primary focus has been upon maximum employment, a major component of their dual mandate which is maximum employment and annual inflationary levels of around 2%. They have let inflation run much hotter in lieu of achieving their maximum employment goal. Believing that the majority of the current level of inflation is transitory, the Federal Reserve has let inflation run to 5.3%, based upon the latest CPI numbers released last week.

However, the most recent jobs report was extremely disappointing and deeply below expectations and forecasts from economists polled by the Wall Street Journal. The expectation was that the August jobs report would indicate an additional 700,000+ new jobs added to payrolls, and the actual number was a tepid 235,000 new jobs added last month.

The weak August jobs report will be weighed against the most recent report by the U.S. Census Bureau, which indicated robust consumer spending last month, resulting in $618 billion, up 0.8%. Economists polled were looking for August consumer spending to be down between -0.8 to -1.8. If you strip out consumer spending on automobiles and trucks, the actual gain for the month of August is 1.8%.

These two reports show an interesting mix between new jobs added and consumer spending. While the jobs report was disappointing and weak at best, consumer spending rose far past the expectations given by economists. Therefore, the Federal Reserve will be faced with making a decision based on strong consumer spending and weak growth in jobs. That will certainly influence their decision as to when they will begin to taper.

For those who would like more information, simply use this link.

Wishing you, as always, good trading and good health,

Gary Wagner

 

Silver Price Prediction – Prices Test Key Support as Prices are Oversold

Silver prices moved lower but bounced off key support levels despite a rally in the dollar. The rise of the greenback on Monday generated headwinds for silver prices as risk-off speed accelerates. U.S. Yields moved. Gold prices have failed to become the security of choice during a risk-off period, edged slightly higher, which helped buoy silver.

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Technical analysis

Silver prices continued to trend lower but held key support levels seen near the August and December lows at 21.95. If prices are able to close above this level for consecutive days it will likely generate a bounce Prices remained below resistance seen near the 10-day moving average, at 23.51. Target support is seen near the August lows at 22.10. Short-term momentum has reversed and turned positive as the fast stochastic generated a crossover buy signal. Prices are oversold as the fast stochastic is printing a reading of 9, below the oversold trigger level of 20, which could foreshadow a correction.

Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover signal. This sell signal occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in negative territory with a downward sloping trajectory which points to lower prices.

Debt Ceiling is not Under Control

The risk-off trade accelerated, continuing the trend experienced at the end of last week.  Congress has been stalling despite urging from Treasury Secretary Yellen to act.  There are rumors that The House of Representation may take up a stop-gap measure to extend spending, but this attempted will have difficulty in the Senate.

Natural Gas Price Prediction – Prices Slide Through Support as Supply Increases

Natural gas prices moved lower on Monday as fear of tropical storm activity abated.  The weather is expected to be warmer than normal over the next 6-10 days, but then becomes milder, according to a forecast from the National Oceanic Atmospheric Administration. The most recent report from the EIA showed a larger than expected build in natural gas inventories, but stocks remain well below the 5-year average. U.S. Supply increased in the latest week.

Technical Analysis

On Monday, natural gas prices dropped sharply, falling 2.75% and gapping lower through key support, which is now resistant near the 10-day moving average at 5.08. Support is seen near the 50-day moving average at 4.23. Short-term momentum has turned negative as the fast stochastic recently generated a crossover sell signal. Medium-term positive momentum is decelerating as the MACD (moving average converge divergence) histogram is printing in negative territory with a declining trajectory which points to consolidation.

Supply Increases

U.S. supply increases as production begins to come back online in the Gulf of Mexico. According to data from the EIA, the average total supply of natural gas rose by 1.7% compared with the previous report week. Dry natural gas production grew by 1.4%, or 1.3 Bcf per day, compared with the previous report week. According to daily reports from BSEE, on a weekly basis, natural gas production outages in the Federal Offshore Gulf of Mexico decreased by about 0.6 Bcf per day this report week compared with the last report.

World Shares Tumble as China Evergrande Contagion Fears Spread

MSCI’s gauge of stocks across the globe shed 2.09%, on pace for its biggest one-day fall since October 2020, as Wall Street’s major indexes sagged more than 2%.

Investors moved into safe havens, with U.S. Treasuries gaining in price, pulling down yields, and gold rising.

Shares in Evergrande, which has been scrambling to raise funds to pay its many lenders, suppliers and investors, closed down 10.2% at HK$2.28.

Regulators have warned that its $305 billion of liabilities could spark broader risks to China’s financial system if its debts are not stabilized.

“Investors are concerned that the Evergrande issue is going represent a domino,” said Jack Ablin, chief investment officer at Cresset Capital Management. “Investors are tending to sell first and look into it to later.”

The Dow Jones Industrial Average fell 787.6 points, or 2.28%, to 33,797.28, the S&P 500 lost 101.41 points, or 2.29%, to 4,331.58 and the Nasdaq Composite dropped 408.25 points, or 2.71%, to 14,635.71.

Economically sensitive sectors, including financials and energy, were hit particularly hard.

The pan-European STOXX 600 index lost 1.67%, with mining stocks sliding.

The selloff on Monday has seen a cumulative $2.2 trillion of value wiped off the market capitalization of world equities from a record high of $97 trillion hit on Sept. 6, according to Refinitiv data.

Worries over Evergrande follow a pullback in equities recently as investors worry over the impact of coronavirus cases on the economy, and when central banks will ease back on monetary stimulus.

The U.S. Federal Reserve is due to meet on Tuesday and Wednesday as investors look for when it will begin pulling back on its bond purchases.

Investors were also keeping an eye on other central bank meetings spanning Brazil, Britain, Hungary, Indonesia, Japan, Norway, the Philippines, South Africa, Sweden, Switzerland, Taiwan and Turkey.

The dollar index rose 0.061%, with the euro unchanged at $1.1725.

The offshore Chinese yuan weakened versus the U.S. currency to its lowest level in nearly a month.

“We are seeing a classic flight to safety in the dollar until we get some sense of clarity on whether or not it is going to be an orderly or disorderly resolution to Evergrande,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington, DC.

Benchmark 10-year notes last rose 22/32 in price to yield 1.2972%, from 1.37% late on Friday.

The iShares exchange-traded fund tracking high-yield corporate bonds edged down 0.5%.

Oil prices fell but drew support from signs that some U.S. Gulf output will stay offline for months due to storm damage.

U.S. crude fell 2.18% to $70.40 per barrel and Brent was at $73.99, down 1.79% on the day.

Spot gold added 0.4% to $1,761.29 an ounce, rising off of a one-month low.

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

(Reporting by Lewis Krauskopf in New York and Tom Arnold in London; Additional reporting by Anushka Trivedi in Bengaluru, Saikat Chatterjee in London, Karen Pierog and Chuck Mikolajczak in New York and Wayne Cole in Sydney; Graphic by Sujata Rao; Editing by Jane Merriman, Mark Potter and Jan Harvey)

Gold Price Prediction – Prices Experience Dead-Cat Bounce

Gold prices traded sideways and continued to experience a dead-cat bounce. The upward momentum was drained by the selloff last week. The rally in the dollar on Monday generated headwinds for gold prices as risk-off speed accelerates. U.S. Yields moved lower as the safety of U.S. treasury bonds lured traders. Gold prices have failed to become the security of choice during a risk-off period. The U.S. debt ceiling is approaching, which means that Congress needs to extend spending, or the government will shut down.

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Technical analysis

Gold prices consolidated and continue to form a bear flag pattern. This scenario is a continuation pattern that pauses before it refreshes lower. Generally, the recovery from a sharp selloff is muted forming a dead-cat bounce before prices start to move lower again. Prices remained below resistance seen near the 10-day moving average, at 1,782. Target support is seen near the August lows at 1,677. The 10-day moving average has crossed below the 50-day moving average, which means that a short-term downtrend is now in place. Short-term momentum has reversed and turned positive as the fast stochastic generated a crossover buy signal. Prices are oversold as the fast stochastic is printing a reading of 17, below the oversold trigger level of 20, which could foreshadow a correction.

Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover signal. This sell signal occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in negative territory with a downward sloping trajectory which points to lower prices.

Silver Price Forecast – Silver Markets Bounce From $22

Silver markets have fallen rather hard during the course of the trading session on Monday but found enough support at the $22 level to turn things around and show signs of life again. That being said, the market is likely to continue to see a lot of volatility in this area, due to the fact that the $22 level is so important from a longer-term standpoint. Quite frankly, if we break down below the $22 level, it is likely that we could see massive selling pressure jump into this market, perhaps reaching down towards the $20 level.

SILVER Video 21.09.21

To the upside, if we were to break above the top of the candlestick it is likely that we could go looking towards the $23 level. That is an area that has offered support in the past, so it should in theory at least offer resistance going forward. Ultimately, this is a market that continues to be very noisy, and you need to pay close attention to the US dollar as it tends to move in a negative correlation to silver.

The market has been drifting lower for a while, and even though we have bounced a bit during the trading session on Monday, it is likely that we are going to see a little bit of a bounce in order to find more selling pressure. I would be a seller of signs of exhaustion to the upside, but I also recognize that at the US dollar suddenly gets sold off, that could provide a little bit of “rocket fuel” to send silver much higher.

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

Crude Oil Price Forecast – Crude Oil Markets Pull Back Towards 50 Day EMA

WTI Crude Oil

The West Texas Intermediate Crude Oil market has fallen a bit during the course of the trading session on Monday, to reach down towards the 50 day EMA. If we can break above the highs of the trading session, it is very likely that we continue to see the momentum to the upside. At that point, the market is likely to test the $74 level, possibly even the $75 level given enough time.

To the downside, the 50 day EMA and the downtrend line both offer a significant amount of support, so there is no way that I can justify shorting this market until we break down below the $67.50 level underneath, which had been a major support level.

Crude Oil Video 21.09.21

Brent

Brent markets also fell initially during the trading session but have turned around to show signs of life again. Because of this, I think that the buyers will continue to jump into this market to pick up any signs of value. For whatever reason, traders still believe that there is going to be a huge move into the energy sector, and at this point in time it is very unlikely to see a massive selloff. At this point, I think we probably go looking towards the $77.50 level over the next couple of days but pay close attention to the risk appetite out there. That of course could have a major influence on where we go next. As long as we stay above the $70 level, it is likely that there will be plenty of buyers in this market to take advantage of “cheap oil.”

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

Natural Gas Price Forecast – Natural Gas Markets Pull Back Towards the $5.00

Natural gas markets have fallen a bit during the course of the trading session on Monday to slice through the $5.00 level, but as you can see you, the market has turned around to show signs of support. Previously, the market had shot straight up in the air, but quite frankly the market has gotten far too ahead of itself. The $4.80 level underneath should be supportive, so if we were to turn around a break down below that level, then it is likely that we go much lower.

NATGAS Video 21.09.21

The market breaking down below that level opens up the possibility of $4.50 being targeted, as well as the 50 day EMA underneath there. Ultimately, the market would have a massive “floor” in it at the $4.00 level. That being said, if we turn around a break above the top of the candlestick for the trading session on Monday, then we could go looking towards the $5.50 level above.

The European Union is hurting for natural gas at the moment, so that has a lot to do with what we are seeing. That being said, there has also been a serious slowdown of refining capacity in the Gulf of Mexico due to the recent hurricane. There is also a tropical storm floating around now, so at this point in time it is a bit of a “perfect storm” going forward. Nonetheless, chasing the trade is a great way to lose money so you need to see this market prove itself to the upside, or find value at much lower levels as mentioned previously.

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

Gold Price Forecast – Gold Continue to Look at $1750 as Support

Gold markets have initially fallen during the course of the trading session on Monday but found enough support just below the $1750 level to show signs of support. This is an area that has been important more than once, so do not be surprised at all to see a little bit of a bounce. Nonetheless, it certainly looks as if there is much more interest in shorting gold than going long. That being said, a nasty candlestick like we had seen on Thursday is very rarely seen in a vacuum.

Gold Price Predictions Video 21.09.21

If we break down below the lows of the Monday candlestick, then it is likely that we could go looking towards the $1680 level. The $1680 level has been a massive support level more than once, and therefore I think it makes for a good target. Rallies at this point in time still looks suspicious, at least until we can take out the 200 day EMA to the upside, and quite frankly we would need to see the US dollar get hammered. Until then, it is very unlikely that the gold markets can be bought.

Fading short-term rallies that show signs of exhaustion will be the way that I get involved in this market, as I do believe that the gold markets continue to show a favorability to the downside. Nonetheless, if we do take out the 200 day EMA, then I would have to believe that the market goes looking towards the $1835 level. Either way, keep an eye on the US Dollar Index chart, because it does tend to move in a negative correlation to what price does when it comes to the yellow metal.

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

Natural Gas Price Fundamental Daily Forecast – Weaker on Forecasts Calling for Lower Cooling Demand

Natural gas futures are edging higher at the mid-session after clawing back earlier losses. The market was under pressure on the opening after weather-driven demand eased over the weekend. Bespoke Weather Services reported declines in both projected cooling degree days (CDD) and heating degree days (HDD).

At 15:22 GMT, December natural gas futures are trading $5.297, up $0.039 or +0.74%.

Natural Gas Intelligence (NGI) reported that liquefied natural gas (LNG) feed gas flows were down 0.5 Bcf/d early Monday amid planned maintenance at the Cove Point LNG facility in Maryland, analysts at EBW Analytics Group said.

Short-Term Weather Outlook

According to NatGasWeather for September 20-26, “A weather system with showers and thunderstorms will exit the Northwest and track across the Midwest/Great Lakes mid-week, then stall over the Ohio/Valley and East late in the week. Highs with this system will be mild to nice with highs of 60s to 70s, locally upper-50s.

The nation’s strongest demand will be from California to Texas as high pressure brings hot highs of 90s to near 100F. National demand will drop to very light levels late this week and next weekend as highs of upper 60s to 80s rules most of the U.S. and with very little coverage of 90s. Overall, national demand will be moderate Monday, then low-very low after.”

Early Peek at Thursday’s EIA Storage Report

Thursday’s U.S. Energy Information Administration storage report is expected to come in slightly above historical norms. NGI’s model is calling for an 82 Bcf injection into natural gas stocks for the week-ended September 17.

Last year, the EIA recorded a 70 Bcf injection for the similar week, and the five-year average injection is 74 Bcf.

Daily Forecast

The daily chart indicates December natural gas futures are getting close to shifting momentum to the downside. We expect to see one more rally to test the resistance at $5.79. Our first objective is $5.434.

If sellers come in at $5.434 then look for new pressure to drive the market into at least $4.867 to $4.649.

“Weather-driven demand for natural gas could slip as cooling demand halves by Thursday, however, while shut-in Gulf of Mexico supply trickles back and technical analysis suggests deeper tests of support,” the EBW team said. “Continued price weakness may be likely later this week.”

Bespoke Weather Services added, “At some point, one would think our prices here in the U.S. can move according to changes in fundamentals and soon enough, changes in weather forecasts.”

“At this stage, we are at a point where we will need some cold in winter to justify current prices, but it remains early to focus on weather, especially with our market just blindly following trends in European prices.”

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

USD Bears Are Fresh Out of Honey Pots

With headline after headline attempting to knock the USD Index off of its lofty perch, I warned on Sep. 13 that dollar bears will likely run out of honey sooner rather than later.

I wrote:

While the USD Index was under fundamental fire in recent weeks, buyers eagerly hit the bid near the 38.2% Fibonacci retracement level. And after positive sentiment lifted the greenback back above the neckline of its inverse (bullish) head & shoulders pattern last week, the USDX’s medium-term outlook remains profoundly bullish.

More importantly, though, after the USD Index rallied by 0.63% last week and further validated its bullish breakout, gold, silver, and mining stocks ran in the opposite direction. And with the divergence likely to accelerate over the medium term, the swarm should sting the precious metals during the autumn months.

Please see below:

ChartDescription automatically generated

Conversely, if the USD Index encounters resistance as it attempts to make a new 2021 high, gold, silver, and mining stocks could enjoy an immaterial corrective upswing. However, the optimism will likely be short lived, and it’s likely a matter of when, not if, the USD Index reaches the illustrious milestone.

Equally bullish for the greenback, with the USD Index’s technical strength signaling an ominous ending for the Euro Index, I warned on Sep. 13 that the latter faced a tough road ahead.

I wrote:

While I have less conviction in the Euro Index’s next move relative to the USD Index, more likely than not, the Euro Index should break down once again and the bearish momentum should resume over the medium term.

And after the Euro Index sunk below the neckline of its bearish head & shoulders pattern last week, lower lows remains the most likely outcome over the medium term.

Please see below:

Chart, line chartDescription automatically generated

Adding to our confidence (don’t get me wrong, there are no certainties in any market; it’s just that the bullish narrative for the USDX is even more bullish in my view), the USD Index often sizzles in the summer sun and major USDX rallies often start during the middle of the year. Summertime spikes have been mainstays on the USD Index’s historical record and in 2004, 2005, 2008, 2011, 2014 and 2018 a retest of the lows (or close to them) occurred before the USD Index began its upward flights (which is exactly what’s happened this time around).

Furthermore, profound rallies (marked by the red vertical dashed lines below) followed in 2008, 2011 and 2014. With the current situation mirroring the latter, a small consolidation on the long-term chart is exactly what occurred before the USD Index surged in 2014. Likewise, the USD Index recently bottomed near its 50-week moving average; an identical development occurred in 2014. More importantly, though, with bottoms in the precious metals market often occurring when gold trades in unison with the USD Index (after ceasing to respond to the USD’s rallies with declines), we’re still far away from that milestone in terms of both price and duration.

Moreover, as the journey unfolds, the bullish signals from 2014 have resurfaced once again. For example, the USD Index’s RSI is hovering near a similar level (marked with red ellipses), and back then, a corrective downswing also occurred at the previous highs. More importantly, though, the short-term weakness was followed by a profound rally in 2014, and many technical and fundamental indicators signal that another reenactment could be forthcoming.

Please see below:

ChartDescription automatically generated

Just as the USD Index took a breather before its massive rally in 2014, it seems that we saw the same recently. This means that predicting higher gold prices (or the ones of silver) here is likely not a good idea.

Continuing the theme, the eye in the sky doesn’t lie. And with the USDX’s long-term breakout clearly visible, the wind still remains at the greenback’s back.

Please see below:

ChartDescription automatically generated

The bottom line?

Once the momentum unfolds, ~94.5 is likely the USD Index’s first stop, ~98 is likely the next stop after that, and the USDX will likely exceed 100 at some point over the medium or long term. Keep in mind though: we’re not bullish on the greenback because of the U.S.’ absolute outperformance. It’s because the region is fundamentally outperforming the Eurozone, the EUR/USD accounts for nearly 58% of the movement of the USD Index, and the relative performance is what really matters.

In conclusion, the USD Index’s sweet performance left sour tastes in the precious metals’ mouths. And with the former’s bullish breakout signaling an ominous future for the latter, gold, silver, and mining stocks will likely confront new lows over the medium term. However, once the autumn months fade and the winter weather approaches, buying opportunities may present themselves. And with unprecedented monetary and fiscal policy likely to underwrite new highs in the coming years, the long-term outlook for gold, silver, and mining stocks remains extremely bright.

Thank you for reading our free analysis today. Please note that the above is just a small fraction of today’s all-encompassing Gold & Silver Trading Alert. The latter includes multiple premium details such as the targets for gold and mining stocks that could be reached in the next few weeks. If you’d like to read those premium details, we have good news for you. As soon as you sign up for our free gold newsletter, you’ll get a free 7-day no-obligation trial access to our premium Gold & Silver Trading Alerts. It’s really free – sign up today.

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

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

* * * * *

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

 

Silver Price Daily Forecast – Silver Tries To Rebound As Demand For Safe-Haven Assets Increases

Support At $22.10 Stays Strong

Silver is currently trying to settle back above $22.30 while U.S. dollar is gaining some ground against a broad basket of currencies.

The U.S. Dollar Index has recently made an attempt to settle above the resistance at 93.40 but failed to develop sufficient upside momentum and pulled back towards 93.30. In case the U.S. Dollar Index gets above 93.40, it will head towards yearly highs near 93.75 which will be bearish for silver and gold price today.

Meanwhile, gold continues its attempts to settle back above $1750. Today, gold benefits from increased demand for safe-haven assets amid global market sell-off. Treasury yields have moved lower as traders rushed to buy U.S. government bonds, providing additional support to gold. In case gold manages to settle above $1750, it will move towards the resistance level at $1775 which will be bullish for silver.

Gold/silver ratio managed to settle above 78.50 and is moving towards the 79 level. Gold/silver ratio gained strong upside momentum, and RSI moved into the overbought territory. However, there is plenty of room to gain additional upside momentum in case the right catalysts emerge. If gold/silver ratio gets to the test of the 79 level, silver will find itself under more pressure.

Technical Analysis

silver september 20 2021

Silver tried to settle below the support level at $22.10 but lost momentum and moved back above $22.30. If silver settles above this level, it will move towards the resistance at $22.60.

A successful test of the resistance at $22.60 will push silver towards the next resistance level which is located at $22.90. If silver gets above $22.90, it will head towards the resistance at $23.20.

On the support side, silver needs to get back below $22.30 to have a chance to develop downside momentum in the near term. The next support level for silver is located near the recent lows at $22.10.

A move below $22.10 will open the way to the test of the support at $21.90. If silver manages to settle below this level, it will head towards the support at $21.65.

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

Price of Gold Fundamental Daily Forecast – Weak Recovery as Investors Rush into Other Safe-Haven Assets

Gold futures are edging higher on Monday after recovering from earlier weakness. The rebound in prices is being fueled by hedge buyers and a drop in Treasury yields, but gains are likely being capped by a stronger U.S. Dollar. The catalyst behind the selling is a sell-off in the global equity markets on fear of contagion due to financial market turmoil in China.

At 13:14 GMT, December Comex gold futures are trading $1759.10, up $7.70 or +0.44%.

Gold prices hit their lowest level since August 11 early Monday after safe-haven buying spiked the U.S. Dollar higher against a basket of major currencies. The move came as investors were monitoring events in the Asia-Pacific region particularly in China and Hong Kong. Meanwhile, investors were also on edge ahead of this week’s two-day Federal Reserve monetary policy meeting that could offer clues on when the central bank will start tapering its pandemic-era stimulus.

The gold market turned around and began to mount a recovery as global equity markets plunged. Investors began buying sovereign debt for protection, namely, U.S. Treasury notes and bonds. The move drove down Treasury yields, helping to support gold prices. Safe-havens like the Japanese Yen and U.S. Dollar were also in high demand.

What’s Shaking Up the Global Financial Markets?

A number of factors are driving investors out of riskier assets and into the traditional safe-havens – Treasury notes, Japanese Yen and U.S. Dollar. Gold is benefiting from the drop in yields but also from the plunge in the global equity markets.

Stock traders essentially need some place to park their profits so gold is in some ways benefitting from this. Liquidity is a major factor and gold isn’t as liquid as the three other safe-havens. Gold appears to be taking on more of a hedging role today. Traders may be buying gold as a hedge against a further decline in stocks.

The primary cause of the market turmoil on Monday is a steep drop in stocks in Hong Kong with shares of embattled Chinese developer China Evergrande Group to blame for the move. Hong Kong’s Hang Seng Index dropped 3.3% to close at 23,099.14. Shares of China Evergrande Group in the city plummeted 10.24%, after failing as much as 17% earlier.

Daily Forecast

December Comex gold futures are finding support inside a key technical area at $1757.40 to $1738.60.

The sell-off in the stock market and weaker Treasury yields could offer some relief for the beat-up asset which has fallen nearly $100 since September 3. However, we expect the selling to resume once the smoke clears.

In order to have a major rally in gold, the central banks would have to pump more liquidity into the financial markets, but that is not likely unless there is a 5-10% correction in the stock market. Although such a move is on the central bankers’ check list, most are worried about withdrawing stimulus from their economies than putting liquidity back in.

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

Stocks Retreat Amid Global Sell-Off

All Eyes On China

S&P 500 futures are under significant pressure in premarket trading as traders focus on the potential collapse of China Evergrande Group, which has amassed more than $300 billion in liabilities.

Fears of another financial crisis coming out of Asia pushed global indices towards multi-week lows, but it remains to be seen whether the impact of a potential Evergrande default will have widespread consequences.

Traders are also nervous ahead of the Fed meeting, although Fed Chair Jerome Powell will likely try to calm markets and reiterate his usual dovish message on September 22.

Global Rush To Safety

The yield of 10-year Treasuries has moved away from recent highs and is trying to settle below 1.30% as traders buy U.S. government bonds to protect themselves from the potential correction in riskier markets.

The U.S. dollar is also moving higher due to its safe-haven status. The U.S. Dollar Index, which measures the strength of the U.S. dollar against a broad basket of currencies, is trying to settle above the resistance at 93.40. In case this attempt is successful, it will move towards yearly highs near 93.75 which may put more pressure on stocks.

Interestingly, gold is gaining ground despite strong dollar as falling yields and demand for safe-haven assets have provided sufficient support. In this environment, gold mining stocks may rebound from yearly lows.

WTI Oil Tries To Settle Below The $70 Level

WTI oil is currently trying to settle below the support at the psychologically important $70 level as traders fear that Evergrande’s financial problems may have a notable negative impact on China’s economy and cut demand for oil.

Most other commodities are also under pressure, and the market mood is very bearish today. Premarket trading indicates that oil-related stocks will find themselves under huge pressure at the beginning of today’s trading session so traders should be prepared for fast moves.

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

GOLD and Silver Elliott Wave Cycles Approaching Support

Back in August Gold made nice and impulsive rally away from 1685 lows, as seen on the 4-hour chart that we labeled as first leg A) of a three-wave recovery within higher degree wave D. So, with current three-wave A-B-C pullback for B), seems like gold may find the base soon, ideally here around 61,8% Fibonacci. retracement, which means that we have to expect another recovery within wave C) of D up to 1850 area, especially if price recovers back above 1782 region.

GOLD 4h Elliott Wave Analysis Chart

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Technically Gold is bouncing from lower Bollinger band and we can we bullish divergence on 4h GOLD chart, seems like Gold searches for the support.

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Silver is coming even lower in the 4-hour chart, now breaking even August lows, so we are tracking final wave 5 of a bigger ending diagonal (wedge) pattern that can find the support soon, ideally here in the 22 – 20 zone, but keep in mind that bulls could be back in the game only if we see a recovery back above 24.80 region.

Silver Elliott Wave Analysis

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Like GOLD, Sliver is also forming bullish divergence on 4h chart means support is nearby.

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

Oil Price Fundamental Daily Forecast – Outside Factors Encouraging Long Liquidation, Profit-Taking

U.S. West Texas Intermediate and International-benchmark Brent crude oil futures are trading lower early Monday, extending Friday’s losses amid a jump in the U.S. Dollar to a three-week high against a basket of major currencies and a potential increase in U.S. supply after a reported rise in the U.S. rig count.

At 11:11 GMT, December WTI crude oil is trading $69.96, down $1.42 or -1.99% and December Brent crude oil is at $73.33, down $1.23 or -1/65%.

Crude Pressured as US Dollar Catches Safety Bid

Dollar-denominated crude oil is getting hit by a sharply higher U.S. Dollar on Monday. The movement is being fueled by overseas activity in Asia. The offshore Chinese Yuan fell to a three-week low dragging commodities lower, while the safe-haven U.S. Dollar rose as worries about Chinese property developer Evergrande’s solvency spooked financial markets.

The drop in the Yuan came on the back of warnings from Chinese regulators that the Evergrande’s insolvency could spark broader risks in the country’s financial system if not stabilized.

Evergrande has been scrambling to raise funds to pay its many lenders, suppliers and investors. A deadline for the company to make an interest payment to creditors looms this week.

US Margin Call Selling Weighing on Crude Prices

U.S. stock futures began the week deeply in the red as investors continued to move to the sidelines in September amid several emerging risks for the market including the fear of contagion in the financial markets following the troubled China property market, an upcoming Federal Reserve meeting, Rising US. COVID cases, debt ceiling negotiations and a new tax bill.

The steep sell-off in stocks is likely triggering a series of margin calls which are forcing hedge funds to sell other assets like crude oil to raise the cash to meet their margin obligations. So far the selling in crude has been relatively light but could increase after the New York futures market opening.

Fear of Increased Supply

U.S. energy firms last week added oil and natural gas rigs for a second week in a row although the number of offshore units in the Gulf of Mexico remained unchanged after Hurricane Ida slammed into the coast over two weeks ago.

Fourteen offshore Gulf of Mexico rigs shut two weeks ago due to Ida remained inactive, energy services firm Baker Hughes Co said in its closely followed report on Friday. Last week, four of those offshore rigs returned to service. The oil and gas rig count, an early indicator of future output, rose nine to 512 in the week to September 17, its highest since April 2020, Baker Hughes said.

Daily Forecast

WTI and Brent crude oil futures are going through normal corrections with traders looking for a pullback into a value area after the market got a little overvalued last week. Long liquidation to meet margin calls in the stock market, fear of increased supply from the recovery in the Gulf and good old-fashioned profit-taking are behind the weakness. The longer-term supply/demand fundamentals remain intact. Prices are just cheaper than they were last week.

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

Daily Gold News: Monday, Sep. 20 – Gold Going Sideways Despite Stock Market’s Rout

The gold futures contract lost 0.30% on Friday, as it fluctuated following Thursday’s decline of 2.12%. On Thursday, it broke below the recent local lows as series of the U.S. economic data releases along with the rallying U.S. dollar led to a sell-off in precious metals. The yellow metal came back to $1,750 price level. This morning the market is extending a short-term consolidation along that support level, as we can see on the daily chart (the chart includes today’s intraday data):

Today gold is 0.2% higher, as it is trading slightly above $1,750 price level. What about the other precious metals? Silver is 0.1% lower, platinum is 1.8% lower and palladium is 3.0% higher. So precious metals’ prices are mixed this morning.

Friday’s Consumer Sentiment release has been slightly worse than expected at 71.0. Today we will get the NAHB Housing Market Index release at 10:00 a.m. But the markets will be waiting for Wednesday’s FOMC Monetary Policy Statement release.

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

Monday, September 20

  • 10:00 a.m. U.S. – NAHB Housing Market Index
  • All Day, Canada – Federal Election
  • All Day, China – Bank Holiday

Tuesday, September 21

  • 8:30 a.m. U.S. – Housing Starts, Building Permits, Current Account
  • Tentative, Japan – Monetary Policy Statement, BOJ Policy Rate

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

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

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Disclaimer

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

 

Commodity Supercycle Sets New Record Highs – Where Next For Prices?

Commodities are currently on an unstoppable run with everything from the metals, energies to agriculture markets setting new record highs as the supercycle firmly gathers pace.

Last week, a wide number of commodities blasted through all-time highs.

Aluminium prices soared to 13-year highs. Nickel prices hit 7-year highs and Uranium prices surged to 9-year highs – surpassing a record 6-year high, set only a week ago.

The bullish momentum also split over into other commodities with Natural Gas rallying to a 7-year high. Sugar prices hitting 4-year highs and Lithium prices climbing to an all-time record high.

In total 27 Commodities ranging from the metals, energies to soft commodities have tallied up double to triple digit gains within the in the past year.

Uranium, Natural Gas and Lithium prices are up 219%, 240% and 215%, respectively.

But the best performing commodity, so far this year, is Crude Oil.

Crude Oil prices have quadrupled this year and are setting new record highs almost every month. Crude Oil prices are currently up over 287% from their 2020 lows.

There are plenty of reasons why commodities are on the move, but the key driver is rapidly surging global inflation, tightening supply, logistical bottlenecks and booming demand across many highly essential commodities as a result of the COVID-19 pandemic.

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:

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

Oil is Still Bullish as the Retracement is Underway

The POC zone 68.25-68.80 is the zone where the price might bounce. CAD is dropping and CAD is correlating to Oil. If we see a retracement there, watch for a move towards 70.80 and 73.79. If bulls want to stay in control the price needs to stay above 67.00. Buying the dips is still the strategy to go with.

Cheers and safe trading,

Nenad